**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
    **FORM
        10-KSB/A**
 **Amendment
        No. 1**
   x   
          Annual Report under Section 13 or 15(d) of the Securities Exchange Act
          of 1934
 For
          the fiscal year ended **December
          31, 2004**
 
 oTransition
          report under
          Section 13 or 15(d) of the Securities Act of 1934
 For
          the
          transition period from _______ to _______
 **UNIVEC,
        INC.**
 (EXACT
        NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
   
 **Delaware**
              **0-22413**
              **11-3163455**(State
                  or other jurisdiction
              (Commission
                  File Number)
              (IRS
                  Employerof
                  incorporation)
              
              Identification Number)
 
 
  **4810
        Seton Drive, Baltimore, MD 21215**
 (Address
        of principal executive offices)
  **(410)
        347-9959**
 (Registrant’s
        telephone number, including area code)
  **N/A**
 (Former
        Name or Former Address, if Changed Since Last Report).
   
 Check
        whether the issuer: (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days.
 Yes
x 
No
o
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of registrant's knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB.x




Revenues
      for the issuer's most recent fiscal year were $19,448,388.


Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes o No x





The
        aggregate market value of the voting stock held by non-affiliates computed
        by reference to the closing price at which the stock was sold on August 31, 2005
        was
        $1,693,933.






-1-


ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
      THE PAST FIVE YEARS





Check
        whether the issuer has filed all documents and reports required to be
        filed
        by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
        securities under a plan confirmed by a court. Yes o No o





APPLICABLE
      ONLY TO CORPORATE REGISTRANTS





As
      of
      August 31, 2005 the issuer had 56,464,432 shares of common stock, $.001 par
      value, outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE


None


-2-





Part
      I








Item
        1.
        Description of Business.
 
 UNIVEC,
        Inc. ("UNIVEC" or "the Company") is an integrated licensing, manufacturing,
        and marketing company dedicated to providing safer health products
        to patients and caregivers worldwide. Univec also assists pharmaceutical
        companies in marketing, fulfillment, and tracking drug samples. Univec
        produces auto-disable and safety syringes. The Company is a Delaware corporation
        incorporated on October 7, 1996, and the successor by merger to UNIVEC,
        Inc., a New York corporation, incorporated on August 18, 1992.
 
 On
        December 31, 2001 Univec, Inc., acquired Physician and Pharmaceutical Services,
        Inc., (PPSI) a company engaged in group purchasing (GPO) and promoting Pharmaceutical
        company prescription samples to physicians for their patients. PPSI reduces
        the cost in the prescription-sampling channel by providing efficient fulfillment
        and tracking of prescription usage. PPSI's national network of pharmacies fills
        the
        sample prescription on a discounted fee and the Company's mail service fulfillment
        complements additional needs. PPSI's approach conforms to regulations requiring
        increased accountability and elimination of diversion of prescription samples,
        consequently reducing the exposure of physicians and pharmaceutical companies to
        potential liabilities and non-compliance penalties. PPSI’s group purchasing
        programs provide
        for reduces prices on prescription drugs and other products through leveraged purchasing
        and closed system market share. Univec also is a distributor of a highly egulated
        pharmaceutical drug, methadone and other prescription drug
        products.
 
 Univec
        during late 2004 established the company as a distributor of specialty and highly
        regulated pharmaceutical products. The company intends to expand the product
        line to
        take
        further advantage of its group purchasing and closed systems purchasing.
 
 Univec
        extended its product line to include a highly regulated pharmaceutical
        (methadone) and
        other
        pharmaceutical products. The company will continue to sell it products through large
        United States based wholesalers as well as direct in large bulk to the larger customers
        of the company. The company’s group purchase programs and closed market
        purchasing positions
        the company’s product line well.
  In
        1997,
        Univec commenced production and sales of its 1cc Auto-Disable Syringes
        (AD-syringes), which are designed to make accidental or deliberate reuse
        difficult. The accidental or deliberate reuse of syringes is a frequent cause
        of
        the spread of the human immunodeficiency ("HIV") and hepatitis viruses, as
        well
        as other blood-borne pathogens. Univec has received 510(k) clearance from
        the
        U.S. Food and Drug Administration (the "FDA") to market it's AD-Syringes
        in the United States.
 
 Univec
        believes that its 1cc difficult-to-reuse syringes are more effective than
        competitive syringes and that they are competitively priced. Univec also believes
        that it is the only company that markets an AD-Syringe with a 1cc barrel,
        which is ideal for dispensing accurate dosages of medicine (e.g., allergy,
        immunization and insulin medicines). It is more difficult to deliver up to
        a
        .95cc dosage accurately with a syringe barrel that is greater than 1cc. Univec
        does not know of any other company that offers a lcc aspirating syringe that
        can
        be locked. Healthcare workers need aspirating syringes to mix medications
        in the syringe barrel and inject medications intravenously. Furthermore,
        Univec believes that aspirating syringes are preferred by diabetes patients
        and needle-exchange programs. Pursuant to programs of international relief
        agencies, Univec has shipped its lcc AD-Syringes to over 80
        countries.
 
 Univec
        also manufactures and markets patented Sliding Sheath Syringes designed
        to protect patients and healthcare workers from needle stick injuries, in
        compliance with the Federal Needlestick Safety and Prevention Act of the United
        States government, and requirements of the Occupational Safety and Health Administration
        (OSHA). Univec has FDA approval for an extendible barrel sleeve syringe
        used in the sliding sheath syringes based on technology licensed by Univec.
  In
        addition, Univec has developed a Bifurcated Needle Safety Syringe specifically
        designed to comply with the Federal Needlestick Safety and Prevention
        Act of the United States government. Univec has been granted 510(k) clearance
        by the FDA. The device is intended for use in administering smallpox vaccines
        in response to potential bio-terrorist threats. The Needlestick Safety mandate
        requires all U.S. healthcare providers to evaluate and implement safer medical
        devices under their OSHA "Exposure Control Plans". All healthcare providers
        must now adopt safer devices to protect workers and others from nee dles
        potentially contaminated with blood borne pathogens such as hepatitis B, hepatitis
        C, and HIV.
 -3-
 In
        general, this "safer device" rule applies in the normal course of operations,
        as well as in connection with any mass immunization program authorized
        by the federal government.
 
 Univec
        markets its AD-Syringes and Sliding Sheath Safety Syringes to governments
        of developing countries, provided that such syringes are manufactured
        in the United States, private hospitals and health facilities in th e
        United
        States, and distributors in the United States.
 
 Problems
        Associated With Traditional Disposable Syringes
 
 In
        developing countries, accidental or deliberate reuse of disposable syringes
        poses a serious risk of transmitting HIV-AIDS, hepatitis and other blood-borne
        pathogens. Relief agencies, including UNICEF and WHO, administered almost
        a
        billion immunizations to women and children through immunization programs
        in developing countries in 1998 and anticipate administering 3.5 billion
        immunizations by 2005. WHO reported that surveys carried out in four of its
        six
        regions indicated that up to a third of immunization injections were unsterile.
        Immunization injections account for less than 10% of injections administered
        within the health sector. The United Nations estimates that more than
        half
        of all non-immunization injections in developing countries are unsafe. According
        to WHO, an estimated 40.0 million adults and children worldwide are infected
        with HIV, 90% of who live in developing countries.
 
 Intravenous
        drug users, who share syringes or use syringes discarded by hospitals,
        medical clinics and laboratories, doctors or diabetic patients, are extremely
        susceptible to HIV, hepatitis and other blood-borne pathogens. An article
        in the May 1996 American Journal of Public Health for Disease Control written
        by an epidemiologist for the Center for Disease Control and Prevention (the
        "CDC") estimates that nearly half of all new HIV infections are occurring in
        intravenous drug users. In the United States, up to 30% of pregnant mothers infected
        with HIV transmit the virus to their babies, according to the CDC. Based
        on
        a study of children with HIV, who received care at Children's Hospital of
        Wisconsin, researchers estimated that the mean total lifetime costs of caring for
        a
        child with HIV was close to $1 million.
 
 As
        a
        result of findings in the United States and developing countries, public
        health officials have encouraged the medical industry to develop safer syringes
        to prevent the spread of blood-borne pathogens, such as HIV and hepatitis.
        In 1995, the House of Delegates -- American Medical Association requested
        "manufacturers of disposable hypodermic needles and syringes to adopt designs
        to prevent reuse and to include in the packaging clear directions for their
        correct disposal." In late 1995, UNICEF and WHO recommended "the use of auto-disable
        syringes instead of disposable, single use syringes in order to avoid
        the
        hazards of unsafe injection practices."
 
 Needlestick
        Prevention
 
 Needlestick
        prevention devices are designed to prevent accidental puncture injuries
        to health care workers and patients before, during, and after the use of
        hypodermic syringes and needles. Statistics indicate that less than 1% of
        all reported
        HIV infections in the United States are attributed to needlestick injuries.
        The most prevalent needle stick prevention device, the extendible barrel
        sleeve, is not a substitute for features that render a syringe difficult-to-reuse;
        however, it can be combined with devices that make a syringe difficult-to-reuse.
        Needlestick prevention methods include:
 
 Retracting
        Needles retract the needle into the barrel after use. These devices
        are effective needlestick prevention devices; however, operators must manually
        trigger the retraction of needles. Retracting needle devices that automatically
        trigger with a single use of the syringe can render the syringe design
        difficult to reuse. However, such devices are costly to manufacture due to
        the
        complexity of the mechanics required to retract the needle.
 
 Self-Destruct
        Needles permit the needle to be collapsed or deformed into a shape,
        which cannot result in a needlestick injury. Although self-destruct needle devices
        are mechanically simpler than retracting needle devices, less prone to malfunction
        and less costly to manufacture, such devices are effective only if the
        operator triggers the self-destruct feature.
 
 Extendible
        Barrel Sleeves enclose the barrel of the syringe in a second cylinder.
        The operator extends the sleeve before and after use to cover the tip of
        the
        needle. The extendible barrel sleeves often lock in the extended position after
        use. In virtually all designs, the operator of the syringe must manually extend
        the barrel sleeve after use. The sleeve does not prevent multiple use of the
        syringe before the operator encloses the barrel. However, extendible barrel sleeves
        are more cost-effective than the other alternatives and can be combined with
        a
        device that makes the syringe difficult to reuse.
   -4-
 
 UNIVEC
        Syringes
 
 Univec
        has developed a 1cc AD-Syringe for aspirating and non-aspirating applications,
        which are ideally suited for dispensing accurate dosages of allergy,
        immunization and insulin medicines. The Company's 1cc AD-Syringe can deliver
        dosages of up to .95cc. With the aspirating syringe, the UNIVEC locking clip
        does
        not limit the user's ability to withdraw and depress ("to aspirate") the
        plunger until the user locks the syringe voluntarily. With the non-aspirating
        syringe, the UNIVEC locking clip limits the user's ability to aspirate
        the plunger and locks the syringe passively.
 
 When
        the
        non-aspirating syringes are assembled, the syringe clip is placed on
        the
        ratcheted plunger in the position needed to limit dosage as desired. When the
        operator depresses the plunger, the clip travels down the barrel by an equal distance.
        Withdrawal of the plunger by any amount embeds the prongs into the barrel
        and the user cannot retract the plunger.
 
 Univec's
        1cc non-aspirating syringe was developed for the needs of immunization
        programs. Using existing components, the Company can limit its non-aspirating
        syringe to any dosage between .05cc and .95cc.
 
 Univec's
        1cc aspirating syringe works similarly to the non-aspirating model,
        except that the clip prongs do not engage the barrel until the operator withdraws
        the plunger completely. Once the operator does so, the clip catches
        a
 single
        ratchet and travels down the barrel as the plunger is depressed and the operator
        cannot withdraw the plunger.
 
 Univec's
        1cc aspirating syringe was developed for healthcare workers, who need
        to
        mix medications in the syringe barrel and inject medicines intravenously.
        Furthermore, the Company believes that aspirating syringes are preferred
        by diabetes patients and needle-exchange programs. The Company does not
        know
        of any other company that offers an aspirating syringe that can be locked.
 
 Univec
        has licensed rights to a United States patent for a sliding sheath to
        function on all standard syringes. The Company believes that its licensed design
        for a safety syringe will compete successfully with the other safety syringes
        on the market. This design can be used on barrels of various sizes.
 
 Marketing
        of Pharmaceutical Company Drug Samples to Physicians
 
 PPSI
        patient StarterScript prescription drug program allows the physician to
        provide to
        the
        patient a cost effective means to support medication management from both
        a
        clinical and economic perspective. The patient sees if they may tolerate the
        medication under both the physician and pharmacist oversight.
 
 The
        PPSI
        online network provides better marketing and clinical integration information
        than traditional systems, and enables pharmaceutical companies to maintain
        market share when competing with generic drugs. The PPSI information system
        includes detailed information such as the individual sales representative,
        zip codes, DEA number, pharmacy and prescribing physician. The PPSI
        system provides pharmaceutical companies with an easy, safe way to offer free
        samples through physicians and increase their value to patients who benefit through
        savings on prescriptions. In addition, the PPSI system provides incentives
        for chain drug stores to stock the pharmaceutical products and for pharmaceutical
        companies to keep their products on managed care formularies. Pharmaceutical
        manufacturers spend over $16 billion a year for the marketing of products.
        PPSI's strategy is to provide flexible sample programs supported by technology
        to assist with distribution, dispensing, reporting, and clinical integration
        that maximizes the intent of appropriate sample model for marketing.
 -5-
 Sales,
        Marketing and Distribution
 
 Univec
        has entered into several agreements with large United States based wholesalers
        for the support and expansion of distribution channels for nationwide
        delivery of the Univec product line.
 
 Univec
        also markets its StarterScript patient prescription sampling services to pharmaceutical
        companies desiring to maintain or expand market position. The company management
        believes that with the growth of third party payments of prescription drug such
        as
        Medicare and managed care companies the direct to consumer programs will
        grow. Univec
        also believes that with more branded pharmaceutical products coming off patent
        will further
        enhance direct patient sampling or StarterScript programs as an offense to generic
        drug substitution.
 
 Univec
          has shipped its lcc AD-Syringes to over 80 countries. Univec intends to
          market
          its Safety-Shield syringes, as well as the Demolizer medical waste disposal
          system to governments of developing countries, private hospitals and health
          facilities in the United States, and distributors in the United States. Univec
          is
          a licensee of products and proprietary manufacturing processes relating
          to 1cc AD-Syringes. For manufacturing in our facilities. The
          Company
 markets
        such syringes to governments of developing countries, private hospitals and
        medical facilities. To stimulate demand for its safety syringes, Univec plans
        to
        initiate promotional and educational campaigns directed at (i) public health
        officers and other government officials responsible for public health policies,
        (ii) doctors and administrators of healthcare facilities responsible for
        treatment of HIV-AIDS and hepatitis patients, and (iii) liability insurance companies.
 
 Univec
        also markets its drug sampling services to pharmaceutical companies desiring
        to maintain or expand market position.
 
 Production
 
 Univec's
        lcc locking syringes are being assembled by contract manufacturers in
        the
        United States, China and Portugal. (See Item 1, "Description of Business" and
        Item
        3 "Legal Proceedings" for the current status of the Company's business. The
        United States manufacturers also mold the Company's proprietary syringe plungers.
        Univec owns stamping, assembly, and molding equipment at its U.S. contract
        manufacturer. Univec relocated its clip plunger assembly production facility
        designed to produce 1cc AD-Syringes from Farmingdale, New York to Baltimore,
        Maryland during July 2003. These assemblies are shipped to our contract manufacturers
        to produce Auto-Disable Syringes.
 
 Univec's
        syringes consist of a standard needle, barrel, rubber stopper, a ratcheted
        plunger designed by the Company, and a pronged stainless steel locking clip
        designed by Univec. The locking clip and plunger can be assembled, with minor
        modifications, into barrels manufactured by Becton-Dickinson, Tyco, and other
        syringe manufacturers. Univec has obtained a patent on its stainless steel locking
        clip, and has been granted a patent for the design of a plunger which, when
        combined with the locking clip, results in a narrow-barreled, difficult-to-reuse,
        locking syringe. The stainless steel for the locking clip and
        the
        plastic for the syringe barrels and plungers is readily available
        from
 several
        sources. The syringe barrels for some of the syringes sold by Univec have
        been
        manufactured by a Portuguese contract manufacturer. Univec has been successful
        through other sources worldwide in purchasing barrels to increase the overall
        production capacity. In addition, Univec continues to send clip plunger assemblies
        produced in the U.S. to syringe manufacturers to also increase overall
        production. Univec continues to pursue alternate sources of supply for components.
        Should there be a need for a certain component from an alternate supplier,
        there can be no assurance that the Company will be able to obtain it on
        acceptable terms, and there can be no assurance that production of certain configurations
        of its lcc locking syringes will not be delayed. Delays resulting from
        the
        selection of an alternate supplier to produce certain components could have
        a
        materially adverse effect on Univec's business.
 
   -6-
 
  Competition
 
 Univec's
        principal competition for syringes is from traditional disposable syringes.
        Becton-Dickinson, Tyco and Terumo control approximately 90% of the worldwide
        syringe market, and are substantially larger, more established and have
        significantly greater financial, sales and marketing, distribution, engineering,
        research and development and other resources than the Company. To Univec's
        knowledge, only Becton-Dickinson and Bader, a German machine tool manufacturer,
        distribute commercially a line of difficult-to-reuse syringes, none
        of
        which allow for aspiration. The Bader DestroJect syringe and the Becton-Dickinson
        SOLOSHOT syringe were designed to dispense a dosage of .5cc only,
        whereas the UNIVEC 1cc locking clip syringe was designed to dispense dosages
        up to .95cc. Univec believes that UNIVEC syringes are more effective than
        competitors' difficult-to-reuse syringes and that the UNIVEC syringes are competitively
        priced. There can be no assurance that the major syringe manufacturers
        or others will not commence production of 1cc difficult to-reuse-syringes,
        or locking syringes which aspirate, or that Univec will be able
        to
        successfully compete in this market.
 
 PPSI's
        competition comes from traditional sampling providers that include the
        actual drug samples and other pharmaceutical benefit management companies that
        offer similar services such as Caremark and Medco Health.
 
 Patents,
        Licenses and Proprietary Rights
 
 In
        1995,
        Univec was granted a United States patent for a locking clip device
        not biased against the plunger. The patent is broad enough to include several
        applications of the design covering the first series of products to be marketed
        by Univec. Univec was granted a United States patent for a plunger design
        which, in conjunction with its patented locking clip, results in a narrow barrel,
        difficult-to-reuse syringe that allows for aspiration during use.
 
 In
        the
        past, Univec has filed patent applications for its locking clip and aspirating
        plunger in certain foreign countries participating in the Patent Cooperation
        Treaty (Canada, Brazil, Mexico, certain European countries, Japan, South
        Korea, China, Russia and Australia). However, patent applications filed in foreign
        countries and patents granted in such countries are subject to laws, rules
        and
        procedures that differ from those in the United States, and accordingly,
        patent protection in such countries may be different from patent protection
        provided by United States laws. In December 2003, to settle an outstanding
        note with Syrinter, Ltd. (Switzerland), the Company assigned certain patents
        for the 1cc auto-disabled syringe as in full payment of the note and interest
        thereon. The Company in turn received relief from restrictive patent payments
        and a perpetual license to exploit these patents provided manufacturing occurs
        in
        the United States. In addition, the Company will continue to receive 15%
        of
        future royalties being earned from the licensing of these items. Univec
        has registered trademarks UNIVEC(R), and Rx Ultra(R), Rx Plus, The Univec
        Crest and the symbol representing no second use, (i.e., the number 2 crossed
        out inside of a circle), with the United States Patent and Trademark Office.





In
      March
      2001, Univec exercised an option to acquire a license of a component
      for a period of the later of ten years or the expiration of the last patent
      relating to the component and its improvements, with the right to terminate
      the agreement if the Company fails to produce and ship at least ten million
      of this component within three years. Univec is committed to pay a royalty
      of $.001, per component sold, with an advance royalty fee of $15,000 previously
      paid. As of December 31, 2004, Univec has sold only an insignificant amount
      subject to royalties under this agreement.





In
      July
      2000, Univec received FDA approval of the sliding sheath syringe and
      began
      to manufacture and market this product in 2001.





In
      August
      2000, Univec entered into a licensing agreement providing for the non-exclusive,
      worldwide use of Univec patents for the manufacturing, use and marketing
      of its auto-disable syringes through the period any patents are still in
      effect, providing for royalties on sales and for the sale of equipment necessary
      to manufacture the product. In accordance with this agreement, Univec has
      earned royalties of $30,284 and $109,690 for the years ended December 31, 2004
      and
      2003, respectively .






-7-





In
      2003
      the Company assigned certain patents to a creditor in payment of an amount
      due and also assigned the future royalties under the auto-disable syringe licensing
      agreement. The Company has licensed back the rights under these patents
      to market and manufacture in North America.





In
      2004
      the Company applied for and received a Provisional Patent from the U.S. Patent
      and Trademark Office on September 21, 2004, the Patent #60/611,670 and Foreign
      Filing License
      Granted October 15,2004, code US60/611,670. However, patent applications filed
      in foreign
      countries and patents granted in such countries are subject to laws, rules
      and
      procedures that differ from those in the United States, and accordingly,
      patent protection in such countries may be different from patent protection
      provided by United States laws. In brief description, a medical device
      with a
      sliding
      sheath to protect caregivers in the dental and the cosmetic market.





Government
      Regulation





The
      manufacture and distribution of medical devices are subject to extensive
      regulation by the FDA in the United States, and in some instances, by foreign
      and state regulatory authorities. Pursuant to the Federal Food, Drug, and
      Cosmetic Act, as amended, and the regulations promulgated there under (collectively,
      the "FDC Act"), the FDA regulates the clinical testing, manufacture,
      labeling, sale, distribution and promotion of medical devices. Before
      a
      new device can be introduced into the market, a manufacturer must obtain
      FDA permission to market through either the 510(k) pre-market notification
      process or the costlier, lengthier and less certain pre-market approval
      ("PMA") application process. With the 510(k) notification, the Company may
      sell
      its 1cc locking clip syringe in the United States, subject to compliance
      with other applicable FDA regulatory requirements. As a Class II device,
      performance standards may be developed for the 1cc locking clip syringe which
      the
      product would then be required to meet. Failure to meet standards for effectiveness
      and safety could require the Company to discontinue the manufacturing
      and/or marketing of the product in the United States. Furthermore, manufacturers
      of medical devices are subject to record-keeping requirements and required
      to report adverse experiences relating to the use of the device.
      Device


manufacturers
      are also required to register their establishments and list their devices
      with the FDA and with certain state agencies and are subject to
      periodic


inspections
      by the FDA and certain state agencies.





Medical
      devices are subject to strict federal regulations regarding the


quality
      of manufacturing ("Good Manufacturing Practices" or "GMP"). GMP


regulations
      impose certain procedural and documentation requirements upon the


Company
      with respect to manufacturing and quality assurance activities. The
      FDA


conducts
      periodic audits and surveillance of the manufacturing, sterilizing
      and


packaging
      facilities of medical device manufacturers to determine compliance


with
      GMP
      requirements. These procedures may include a product recall or a
      "cease


distribution"
      order which would require the manufacturer to direct its


distributors
      and sales agents to stop selling products, as well as other


enforcement
      sanctions. Univec's manufacturing facilities have not been
      certified


as
      satisfying GMP requirements. Univec's facilities will be subject to
      extensive


audits
      in
      the future, pursuant to standard FDA procedure. No assurance can be


given
      that when the Company is audited that it will be found to be in
      compliance


with
      GMP
      requirements, or that if it is not found in compliance, what
      penalties,


enforcement
      procedures or compliance effort will be levied on or required of
      the


Company.
      To date, Univec has not been audited by the FDA. The FDA also has
      the


authority
      to request repair, replacement or refund of the cost of any device


manufactured
      or distributed by the Company, and the failure to meet standards


for
      safety and effectiveness could require the Company to discontinue
      marketing


and/or
      manufacturing its product in the United States.





The
      introduction of Univec's products in foreign markets will also
      subject


Univec
      to
      foreign regulatory clearances which may impose additional
      substantive


costs
      and
      burdens. International sales of medical devices are subject to the


regulatory
      requirements of each country. The regulatory review process varies


from
      country to country. Many countries also impose product standards,
      packaging


requirements,
      labeling requirements and import restrictions on devices. In


addition,
      each country has its own tariff regulations, duties and tax


requirements.
      Univec's products are required to satisfy international


manufacturing
      standards for sale in certain foreign countries.





The
      approval by the FDA and foreign government authorities is
      unpredictable


and
      uncertain, and no assurance can be given that the necessary approvals
      or


clearances
      for the Company's products will be granted on a timely basis or at


all.
      Delays in receipt of, or a failure to receive, such approvals or


clearances,
      or the loss of any previously received approvals or clearances,


could
      have a materially adverse effect on the business, financial condition
      and


results
      of operations of the Company. Furthermore, approvals that have been
      or


may
      be
      granted are subject to continual review, and later discovery of


previously
      unknown problems may result in product labeling restrictions or


withdrawal
      of the product from the market. Moreover, changes in existing


requirements
      or adoption of new requirements or policies could adversely affect


the
      ability of Univec to comply with regulatory requirements. There can be
      no


assurance
      that Univec will not be required to incur significant costs to
      comply


with
      applicable laws and regulations in the future. Failure to comply
      with


applicable
      laws or regulatory requirements could have a materially adverse


effect
      on
      Univec's business, financial position and results of operations.







-8-





Research
      and Development





For
      the
      years ended December 31, 2004 and 2003, Univec expended $28,871 and


$28,547,
      respectively, on product development expenses.





Employees





As
      of
      July 31, 2005, Univec employed four persons, including two full
      time


in
      sales
      and marketing, one full time in financial administration, and one
      full


time
      in
      production. None of Univec's employees is covered by a collective


bargaining
      agreement.





As
      of
      July 31, 2005, PPSI had no employees, but utilizes outside
      marketing


representatives
      and consultants for marketing and employees of affiliated


companies,
      owned by a stockholder/officer of the Company, to provide certain


administrative
      services. These expenses, together with other expenses, have not


been
      allocated between these companies.








Item
      2.
      Description of Property.





Univec
      occupies a production facility, warehouse, administrative, and


executive
      offices in Baltimore, MD (comprised of approximately 22,000 square


feet
      of
      space) pursuant to a lease that expired on July 15, 2004 with ten
      (10)


renewable
      one (1) year option terms which are automatically renewable by
      Univec.


Rental
      expense for the space is $72,000 per annum plus certain common
      charges,


maintenance
      costs and real estate taxes, subject to a maximum increase of 3%
      for


each
      three year term.





PPSI
      shares office space with affiliated companies, owned by the Chief


Executive
      Officer of Univec. The expenses of the space, together with other


expenses,
      that would be allocated to PPSI are insignificant.





Item
      3.
      Legal Proceedings.





In
      February 2000, a former consultant commenced an action against the


Company
      and its directors, Alleging breach of contract and fiduciary duty,
      and


is
      seeking consulting fees in the amount of: (1) 250,000 shares of common
      stock,


(2)
      $192,000 and (3) costs of this action. The Company and counsel do
      not


believe
      the consulting fees are due and will continue to vigorously defend
      this


action.








Item
      4.
      Submission of Matters to Vote of Security Holders.





The
      Annual Meeting of Stockholders of Univec, Inc. for the year ended


December
      31, 2003, was held on August 12, 2004, to consider and vote upon a
      proposal


to
      elect
      S. Robert Grass, Dr. David Dalton, John Frank and William Wooldridge
      as


directors,




The
      number of votes cast for and against each of the foregoing proposals and the
      number


of
      abstentions are set forth below.




Proposals
      to Elect Directors:




**For**
            
            **Withheld**S.
                Robert Grass
            
            19,641,801
            
            0David
                Dalton
            
            19,620,601
            
            21,200John
                Frank
            
            19,620,601
            
            21,200William
                Wooldridge
            
            19,641,801
            
            0







-9-





tem
      5.
      Market for Common Equity and Related Stockholder Matters.





(a)(1)
      Prior to July 2, 1999, the Company's Common Stock and redeemable


Common
      Stock Purchase Warrants (expired April 2002) traded on the Nasdaq
      SmallCap


Market.
      Following that date, the common stock and warrants have been quoted
      on


the
      OTC
      Bulletin Board under the symbols "UNVC" and "UNVCW", respectively.





Set
      forth
      below are the high and low closing sale prices for the Common Stock


on
      the
      over-the-counter bulletin board from January 1, 2003 through December
      31,


2004
      and
      the first quarter of 2005.





**Common
                Stock**
            ********
            **("UNVC")**
            ******Quarter
                Ended**
            ****
            **High**
            ****
            **Low**March
                31, 2003
            
            $
            0.070
            
            $
            0.040June
                30, 2003
            
            $
            0.110
            
            $
            0.100September
                30, 2003
            
            $
            0.260
            
            $
            0.050December
                31, 2003
            
            $
            0.140
            
            $
            0.070March
                31, 2004
            
            $
            0.150
            
            $
            0.090June
                30, 2004
            
            $
            0.120
            
            $
            0.070September
                30, 2004
            
            $
            0.090
            
            $
            0.060December
                31, 2004
            
            $
            0.110
            
            $
            0.040March
                31, 2005
            
            $
            0.110
            
            $
            0.100











(1)
      As of
      December 31, 2004, there were 120 holders of record of the Common


Stock.





(2)
      During the fiscal year ended December 31, 2004, Univec sold


unregistered
      securities to a limited number of persons in transactions exempt


from
      the
      registration requirements of the Securities Act, as described
      below.


Except
      as
      indicated, there were no underwriters involved in the transactions,


and
      there
      were no underwriting discounts or commissions paid in connection


therewith.
      The purchasers of securities in each such transaction represented


their
      intention to acquire the securities for investment only and not with
      a


view
      to
      or for sale in connection with any distribution thereof and
      appropriate


legends
      were affixed to the certificates for the securities issued in such


transactions.
      All purchasers of securities in each such transaction had adequate


access
      to
      information about Univec, and in the case of transactions exempt
      from


registration
      under Section 4(2) of the Securities Act, were sophisticated


investors.




1.
      During
      2004, a Univec officer converted $125,262 of contractual benefits
      to


1,660,035
      common shares.





2.
      On
      February 5, 2004, Univec converted 50 shares of Series E Preferred Stock
      to


799,371
      common shares at $.064 per common share.





3.
      On
      February 15, 2004, two Company officers exchanged 500,000 common
      shares


in
      payment of a total of $50,000 compensation options at $.05 per
      share.





4.
      On
      July 3, 2004, Univec issued 500,000 shares at $.02 per common share


of
      common
      stock to a former director as payment of $10,000 of notes payable.





5.
      On
      November 12, 2004 Univec issued 6,000,000 shares of common stock to
      a


vendor
      in
      exchange for $240,000 financial consulting services at $.04 per
      share.





6.
      On
      December 8, 2004, Univec converted 30 shares of Series E Preferred Stock
      to


990,970
      common shares at $.0323per common share.






-10-




Item
      6.
      Management's Discussion and Analysis




The
      following discussion and analysis should be read in conjunction
      with


Univec,
      Inc's ("Univec", "we" or "our"), consolidated financial statements,


including
      the notes thereto, appearing elsewhere in this report.





Condensed
      Consolidated Results of Operations




**2004**
              **2003**
              **Change**Revenues
              $
                  19,448,388
              $17,359,771
              12%
 Cost
                  of Revenues
              $
                  19,174,494
              16,936,565
              13%
 Gross
                  Margin
              273,894
              423,206
              (35%)Expenses:Marketing
                  and SellingExpense
              123,400
              379,738
              (68%)Product
                  Development
              28,871
              28,547
              1%General
                  andAdministrative
              1,,847,246
              1,380,350
              34%Interest
                  Expense, Net
              108,092
              91,564
              18%Gain
                  on Extinguishmentof Debt
              (144,819)
              (24,872)
              482%Loss
                  on write-off ofGoodwill
              1,774,119
              -
              -Loss
                  on sale of Subsidiary
              597,056
              -
              -Other
                  Income
              (47,795)
              -
              -Loss
                  on capitalized lease
              -0-
              121,366
              -Total
                  Expenses
              (4,286,170)
              (1,976,693)
              117%Discontinued
                  Operations
              (8,260)
              (93,502)
              (91%)Net
                  Loss
              $
                  (4,020,536)
              $
                  (1,646,989)
              144%





Sales
        within PPSI’s GPO comprised more than 99% of the total sales for 2004. A
        breakdown of revenues and cost of revenues for 2004 between the Company and
        its
        wholly-owned subsidiary, PPSI, are as follows:
 
 **Univec**
              **PPSI**
              **Total**Revenue
              $59,816
              $19,388,572
              $19,448,388Cost
                  of Revenues
              53,933
              19,120,561
              19,174,494Gross
                  Margin
              $
                  5,883
              $
                  268,011
              $
                  273,894


The
      Company has corrected an error which occurred during the year ended December
      31,
      2003


in
      connection with the capitalized lease of equipment. The underlying fixed assets
      were


purchased
      by an affiliated company owned by an officer of the company and leased to the


Company.
      In 2003, the Company originally reported the payoff of the lease from proceeds
      of loans.





The
      restatement recorded the reinstatement and subsequent write-off of the old
      capitalized lease


and
      the
      capitalization of the new lease, which resulted in an additional loss of
      $115,031, less than


$0.01,
      per share.





The
      Company determined that the goodwill with a carrying value of $1,774,119 had
      been


fully
      impaired and has written-off the entire balance.





The
      Company has its focus on the marketing, production, development and


distribution
      of its pharmaceutical and proprietary products and licensing of the


technology
      of its insulin and tuberculin sliding sheath safety syringes.





Gross
      profit for the year ended December 31, 2004 decreased to 1.4% from
      2.4%


in
      2003.
      Gross profit based on product sales for 2004 decreased to $273,894 as


compared
      to $423,206 in 2003. The reduced gross profit is primarily due to
      the


lower
      gross profit contribution from PPSI’s GPO revenue and also from lower
      sales


volume
      of
      our 1cc clip syringe. The GPO gross profit was 1.4% and 2.4% for the


year
      2004
      and 2003, respectively. The reduction of syringe gross profit is
      largely


the
      result of decreased sales volume and fixed overhead costs of $7,290. We


anticipate
      gross profit levels to remain at current levels, unless we increase
      our


market
      penetration, our prices, product mix and/or realize anticipated
      production


or
      economic benefits that we anticipate as a result of our relocation to
      Maryland


from
      New
      York during 2003 and recent financings.









-11-





As
      a
      result of the acquisitions of PPSI, we have broadened our pharmaceutical product distribution
      base. We anticipate increases in sales on a period by period basis from PPSI
      if
      we can increase our market penetration in these areas.





Marketing
      and selling costs in 2004 decreased $256,338  (68%) from
      2003. This decrease is
      due to
      decreases in shipping costs, rent and compensation costs, as a result of limited funds
      available to conduct marketing activities. As a result of our 2004 financing, we
      anticipate increasing our marketing activities.





Product
      development expense for 2004 increased by $324 (1.1%) as compared to 2003. This
      increase was the result of increased expenditures for patent legal costs and product
      testing expense.





General
      and administrative expenses for the year ended December 31, 2004 increased
      $466,896 (34%) as compared to 2003. This increase is due primarily to increases
      in professional fees, insurance and relocation costs offset in part by decreases in
      compensation, GPO rebate costs, securities maintenance expenses and a $75,000
      reserve provided
      for inventory valuation. There was also an $85,088 provision for equipment
      located at
      former
      suppliers, which is no longer being used in production activities of the
      Company.





Interest
      expense for the year ended December 31, 2004 increased by $16,528


(18%)
      as
      compared to 2003 primarily as a result of increased debt during
      2004.





Other
      income for the year ended December 31, 2004 includes $36,349 gain on the sale
      of


marketable
      securities plus $11,446 gain on the sale of equipment.





Net
      loss
      for 2004 increased by $(2,373,547) (144%) primarily due to the


$1,774,119
      write-off of goodwill and a loss of $597,056 on the sale of a subsidiary. The


subsidiary
      was sold during August 2004 in order to reduce fixed costs associated with
      its


operation.
      Without considering the loss on the sale of the subsidiary and gain on
      extinguishment


of
      debt
      ($144,819), the gain on the sale of equipment and marketable securities of
      $47,795, the


increase
      in the net loss before non-recurring items of $(243,685) was primarily related
      to


the
      reduction in gross profit of $149,312.








Liquidity
      and Capital Resources




Liquidity
            and Capital Resources, Page 11 - “Viable Plan” to generate positive
            cash .
 
 The
            Form
            10-KSB states that the Registrant’s management is currently seeking additional
            investment capital to support its entrance into new business ventures
            and
            provide the capital needed to operate. Further, in Part I, Item 1 the
            Registrant
            states that during late 2004 the company was established as a distributor
            of
            specialty and highly regulated pharmaceutical products. The company intends
            to
            expand the product line to take further advantage of its group purchasing
            and
            closed systems purchasing. Additionally, In 2004 the Company applied
            for and
            received a Provisional Patent from the U.S. Patent and Trademark Office
            on
            September 21, 2004, the Patent #60/611,670 and Foreign Filing License
            Granted
            October 15, 2004, code US60/611,6700 .... in brief description, a medical device
            with a sliding sheath to protect caregivers in the dental and cosmetic
            markets.
  These
            significant new products are anticipated to provide the company with
            revenue
            sources and gross profits which will adequately support its continued
            operations. Because of their prior discussion in the Description of the
            Business
            segment of the Form 10-KSB, any revisions to Note 3 of the financial
            statements
            would be repetitious in these circumstances .


The
      working capital deficit of $2,542,657 at December 31, 2003, increased to a
      deficit


of
      $4,207,570 at December 31, 2004. A significant reason for this increase is
      the
      classification


of
      $457,377 of formerly long-term debt as current debt due to $79,651 in late
      payments and $377,726


for
      non-compliance with contractual covenants. Further, net increases in accounts
      payable and


accrued
      expenses, total loans payable and deferred compensation, partially offset by
      an
      increase


in
      accounts receivable also
      accounted for the decrease in working capital.





The
      accompanying financial statements have been prepared on a going concern basis,
      which


contemplates
      the realization of assets and the satisfaction of liabilities in the normal
      course of business.


As
      of
      December 31, 2004, the Company had negative working capital of $4,207,570 and
      stockholders'


deficit
      of $3,717,269 and had previously incurred net losses of $(4,020,536) and
      $(1,646,989) for the


years
      ended December 31, 2004 and 2003. The Company is also in default of
      approximately $1,200,000


of
      loan
      and notes payable all of which are payable on demand as a result of such
      defaults. These factors,


among
      others, indicate that
      the
      Company's continuation as a going concern is dependent upon its
      ability


to
      obtain adequate financing
      and/or achieve profitable operations. The financial statements do not


include
      any adjustments
      related to the recoverability and classification of recorded asset amounts
      or
      the


amounts and
      classification of liabilities that might be necessary should the Company be
      unable to


continue
      in existence.





Management
      is currently seeking additional investment capital to support its entrance
      into


new
      business ventures and provide the capital needed to operate.





Net
      cash
      used in operating activities increased by $416,215(125%)
      to
      $747,984for the


year
      ended December 31, 2004 from 2003, primarily due to the increased net
      loss.




Net
      cash
      used in investing activities of $743,145 resulted from the purchases of
      restricted cash


deposits,
      fixed assets and cash used in the sale of the subsidiary during 2004.




Net
      cash
      provided by financing activities increased by $1,252,420(489%)
      to
      $1,508.751 for


2004
      from
      $256,331 provided during 2003. This increase resulted from an increase in
      aggregate


borrowings
      of $1,200,127 and decrease in aggregate repayments of borrowings of
      approximately


$25,960.
      There was also a $50,000 non-recurring sale of securities during
      2004.




Although
        revenue increased as a result of the 2004 PPSI GPO operations for the entire
        year as we


continued
      to market our safety syringes, we suffered from a serious shortage of working
      capital,


which
      resulted in the Company’s limited ability to market and sell its
      products.






-12-






In
      July
      2004, the Company borrowed an aggregate of $1,000,000 from a city development
      agency,


a
      state
      development agency and a stockholder. These proceeds provided us with resources
      to acquire


equipment,
      refinance an equipment capital lease and for working capital to enable us to
      continue


implement
      our business strategy. The proceeds from the above loans and our designation
      as
      a


minority
      business enterprise (MBE) should increase our marketing services to
      pharmaceutical


companies,
      to increase our sales of safety syringes and develop new products.





As
      a
      result of these actions, Univec’s management anticipates that operations will
      generate a


positive
      cash flow during our next fiscal year, but there can be no assurance this will
      occur.




The
      relatively low trading price and volume of our common shares hampers our ability
      to raise


equity
      capital. There is no assurance that any such equity financing will be available
      to the


Company
      or on terms we deem favorable. Management will continue its efforts to obtain
      debt and/or


equity
      financing.








Significant
      Estimates




In
          conformity with interpretive MD&A guidance provided in Release 33-8350, we
          herein provide details of significant estimates and assumptions involved
          in the
          Company’s application of GAAP.
 
 In
          accordance with SFAS 142 - Goodwill and Other Intangible Assets the Company
          wrote-off of the entire $1,774,119 balance of impaired goodwill. This judgment
          was provided in accordance with the GAAP provisions used to evaluate the
          future
          value of intangible assets. The Company determined that the excess value
          of
          goodwill paid in the course of the acquisition of its wholly owned subsidiary,
          Physicians and Pharmacy Services, Inc. could no longer be supported by
          the
          evaluation of potential future profitability of the subsidiary. Management’s
          appraisal of future discounted cash flows and other factors resulted in
          the
          complete write-off of the wholly impaired asset. Further, the Company applied
          SFAS 5 to determine its provision for losses on litigation. Finally, the
          Company, which was listed as a public company during 2004 on the OTC Bulletin
          Board during 2004, applied SFAS 123 and EITF 96-18 to value equity securities
          which were issued in payment of various corporate
          obligations
  New
      Accounting Pronouncements





Management
      does not believe that any recently issued, but not yet effective


accounting
      pronouncements, if adopted, would have a material effect on the


accompanying
      financial statements. Financial Accounting Standards Board
      Statement


#
      123R
      Stock Based Compensation is not expected to have a material effect on the


Company’s
      financial statements.





Major
      Customer





For
      the
      year ended December 31, 2004, our largest customer was a company


owned
      by
      our chief executive officer. We intend to reduce our reliance


on
      this
      customer through expanding sales to others.





Forward
      Looking Statements





Except
      for the historical information contained herein, the matters
      discussed


in
      this
      report are forward-looking statements that involve risks and


uncertainties,
      including market acceptance of Univec's products, timely


development
      and acceptance of new products, impact of competitive products,


development
      of an effective organization, interruptions to production, and
      other


risks
      detailed from time to time in Univec's SEC reports and its
      Prospectus


dated
      April 24, 1997 (as supplemented by the Prospectus Supplement dated
      April


29,
      1997)
      forming a part of its Registration Statement on Form SB-2 (File No.


333-20187),
      as amended, which was declared effective by the Commission on April


24,
      1997.








Item
      7.
      Financial Statements.





The
      financial statements follow Item 13 of this report.





Item
      8.
      Changes in and Disagreements with Accountants on Accounting and


Financial
      Disclosure.





A
      Form
      8-K was filed on June 13, 2005 and amended by a Form 8-K/A filed on August


1,
      2005,
      reporting the resignation of the Company’s principal registered
      independent


public
      accounting firm. Further, the Registrant reported that the auditor’s report for


the
      previously issued Form 10-KSB for the year ended December 31, 2003 could no


longer
      be
      relied upon. Also, the former principal registered independent public
      accounting


firm
      has informed the Registrant that it may no longer rely upon review reports
      issued for


all
      Form 10-QSB for all quarters starting with the quarter-ended March 31, 2003
      through


the
      quarter-ended September 30, 2004.








-13-


Item
      8A
      CONTROLS AND PROCEDURES


In
              SEC
              Release 33-8350 interpretive MD&A guidance is presented for reporting the
              Registrant’s annual conclusions regarding management’s evaluation of controls
              and procedures. In accordance with such guidance:
 
 (a)
              Item
              8A of Form 10-KSB for the year ended December 31, 2004 incorrectly
              states that
              the “Evaluation Date” for the Registrant’s assessment of the Company’s
              disclosure controls and procedures (as defined in Exchange Act Rules
              13a-14(c)
              and 15-d-14(c) was concluded within 90 days of the filing date of the
              quarterly
              report.
 
 This
              definition of the “Evaluation Date”, as stated in the Form 10-KSB is incorrect.
              The “Evaluation Date” was concluded within 90 days of the filing date of the
              Form 10-KSB annual report. The Evaluation Date evaluation disclosed
              that the
              Company's disclosure controls and procedures were adequate and effective
              to
              ensure that material information relating to the Company and its consolidated
              subsidiaries would be made known to them by others within those entities,
              particularly during the period in which this annual report was being
              prepared.
 
 (b)
              Changes in internal controls. There were no significant changes in
              the Company's
              internal controls or in other factors that could significantly affect
              the
              Company's disclosure controls and procedures subsequent to the Evaluation
              Date,
              nor any significant deficiencies or material weaknesses in such disclosure
              controls and procedures requiring corrective actions. As a result,
              no corrective
              actions were taken.
 
 
 Item
              8A
              CONTROLS AND PROCEDURES on Page 13 has been restated as follows:
 
 (a)
              Explanation of disclosure controls and procedures. The Company's chief
              executive
              officer and its chief financial officer after evaluating the effectiveness
              of
              the Company's disclosure controls and procedures (as defined in Exchange
              Act
              Rules 13a-14(c) and 15-d-14(c) as of a date within 90 days of the filing
              date of
              the quarterly report (the "Evaluation Date") have concluded that as
              of the
              Evaluation Date, the Company's disclosure controls and procedures were
              adequate
              and effective.




Item
      III




Item
      9.
      Directors, Executive Officers, Promoters and Control Persons;


Compliance
      With Section 16(a) of the Exchange Act.




Directors,
      Executive Officers and Key Employees





The
      directors, executive officers and key employees of Univec are as


follows:





Name
            Age
            PositionDr.
                David Dalton
            56
            Chief
                Executive Officer, President and a DirectorS.
                Robert Grass
            71
            Chairman
                of the Board of DirectorsWilliam
                Wooldridge
            60
            DirectorRaphael
                Langford
            60
            Chief
                Operating Officer and Executive Vice PresidentMichael
                Lesisko
            55
            Treasurer,
                Secretary and Chief Financial
                Officer








Dr.
      David
      Dalton assumed the position of President and Chief Executive


Officer
      of the Company on January 1, 2002, concurrent with the acquisition
      by


Univec,
      Inc. of Physician and Pharmaceutical Services, Inc. (PPSI), a
      Baltimore


based
      company founded by Dr. Dalton. Dr. Dalton has over 35 years experience
      in


the
      healthcare industry, including 18 years with Rite-Aid where he served
      as


Corporate
      Vice President.





Dr.
      Dalton founded Health Resources, Inc., in 1983, a pharmacy service


provider
      having contracts with over 50,000 retail pharmacies for billing and


payment
      of prescription orders through plan providers. HRI is recognized as
      one


of
      the
      leading Black Enterprises in the United States. Dr. Dalton also
      founded


Pharmacy
      Services, Inc., a pharmacy fulfillment center for correctional and


other
      institutions, with facilities in Maryland, Tennessee and
      Pennsylvania.





On
      March
      15, 2002 S. Robert Grass was elected a director of Univec. He was


elected
      Chairman of the Board of Directors in May, 2002. Mr. Grass has been


associated
      with the pharmaceutical and medical device industry for over


thirty-two
      years. Mr. Grass developed a chain of pharmacies known as White


Shield
      Drugstores in Pennsylvania, serving as President, Chief Executive
      Officer


and
      Chairman of the Board from 1970 to 1996. Mr. Grass also served as
      Chief


Executive
      Officer and Chairman of the Board of Managed Care RX, a drug


fulfillment
      and mail order business from 1994 to 1999.






-14-




William
      Wooldridge has been a director since August 5, 2003. Mr.


Wooldridge
      is a recognized and respected entrepreneur. He is the founder of


MedEcon,
      Inc. one of the largest group purchasing organizations in the
      United


States.
      Over a twenty-eight year period he has developed a corporation with


medical
      portfolio sales in excess of $3.5 billion. In 1999, Mr. Wooldridge
      formed


OrderButton.Net,
      a new web-based transaction processing service that facilitates


the
      establishment of merchant sites on the internet. Since 2002, Mr.
      Wooldridge


has
      been
      developing a franchised, non-traditional based photography company.




Raphael
      Langford has been Chief Operating Officer and Executive Vice-President


of
      Univec
      Corporation since April 2003. Prior to April 2003, Raphael Langford was


Vice-President
      of Physician Pharmaceutical Services, Inc. (PPSI) A nationwide PBM with


Over
      50,000 pharmacies in its network. Mr. Langford managed the design and creation
      of


products/services
      that serve the PBM market for PPSI, he was responsible for operations


planning
      and control; material management; total quality management; benchmarking; and


performance
      measurement. Mr. Langford career highlights also include as Executive Director


of
      the
      National Foundation of Women Legislators. Mr. Langford served as liaison to
      Federal


and
      State
      elected officials. He was responsible for implementing National Policy
      Committees


for
      Women
      Legislators to set guidelines for Alternative, Holistic & Complementary
      Health.


Mr.
      Langford co-chaired committees on Alcohol and Substance Abuse and served as
      chairman


for
      Health, Longevity & Long-Term Care Pain Management. He has work on special
      projects


with
      HHS
      and DEA in Washington, DC. Mr. Langford is a past President & CEO of Olympic


International,
      Inc. The company specialized in international brokering, manufacturing
      and


the
      network of raw materials to more than 17 countries. Mr. Langford has over
      thirty-five


years
      experience in senior management positions with AT&T, Inc., Norton Simon,
      Inc.


and
      other
      telecommunications and pharmaceuticals entities. He has received credits
      in


business
      management studies and Industrial psychology at Case Western Reserve University.





Michael
      Lesisko, a certified public accountant, was named as Chief


Financial
      Officer of Univec on September 9, 2002. Mr. Lesisko was named


Treasurer
      and Secretary of Univec on February 11, 2003. From June 1996 to


September
      2002 Mr. Lesisko was a CPA in public practice. He served as Vice


President
      of Finance of CarrerCom Corporation and Subsidiaries from November


1988
      to
      May 1996. Prior thereto, he served as a partner with KPMG Peat
      Marwick


from
      July
      1982 to August 1988, where he managed financial audits and a
      diverse


tax
      practice.





All
      directors hold office until the annual meeting of stockholders of


the
      Company following their election or until their successors are duly
      elected


and
      qualified. Officers are appointed by the Board of Directors and serve at
      its


discretion.





Meetings
      of the Board of Directors and Information Regarding Committees





The
      Board
      of Directors has two standing committees, an Audit Committee and


a
      Compensation Committee. On August 12, 2004, Mr. John Frank and William
      Wooldridge


were
      elected to the Audit Committee. The duties of the Audit Committee
      include


recommending
      the engagement of independent auditors, reviewing and considering


actions
      of management in matters relating to audit functions, reviewing
      with


independent
      auditors the scope and results of its audit engagement, reviewing


reports
      from various regulatory authorities, reviewing the system of
      internal


controls
      and procedures of Univec, and reviewing the effectiveness of
      procedures


intended
      to prevent violations of law and regulations. The Audit Committee held
      two


meetings
      in 2004. On August 12, 2004, Mr. S. Robert Grass was elected to the


Compensation
      Committee. There was one meeting of the Compensation Committee in
      2004.





The
      Board
      of Directors held four meetings in 2004, which included special


telephonic
      meetings. All Directors attended at least 75% of the total number


of
      Board
      meetings and meetings of committees on which they served during the


period
      they served thereon during 2004.





Section
      16(a) Beneficial Ownership Reporting





Section
      16(a) of the Securities Exchange Act of 1934 requires Univec's
      Officers,


Directors
      and persons who own more than ten percent of a registered class of


Univec's
      equity securities within specified time periods to file certain
      reports


of
      ownership and changes in ownership with the Securities and Exchange


Commission
      (the "Commission"). Officers, Directors and ten percent
      stockholders


are
      required by regulation to furnish Univec with copies of all Section
      16(a)


forms
      they file. Based solely on a review of Copies of such reports received
      by


Univec
      and written representations from such persons concerning the necessity
      to


file
      such
      reports, Univec is not aware of any failures to file reports or
      report


transactions
      in a timely manner during the fiscal year ended December 31, 2004.





-15-


Item
      10.
      Executive Compensation.





The
      following table sets forth the compensation awarded to, earned by
      or


paid
      to
      Univec's Chief Executive Officer and each other executive officers
      of


the
      Company whose salary and bonus for the two years ended December 31,
      2004


exceeded
      $100,000.




Annual
                Compensation
            Long-Term
                CompensationOther
                Annual
            SecuritiesName
                and Principal Position
            Year
            Salary
            Compensation
            Underlying
                OptionsDr.
                David Dalton
            2003
            $
                360,000(1)
            -
            1,000,000(1)Chief
                Executive Officer andPresident2004
            $
                396,000(2)
            -
            -Jonathan
                Bricken
            2003
            $
                129,969
            -
            NoneVice
                President





(1)
      During 2003, Dr. David Dalton earned a salary of $360,000, plus
      life,


health
      and disability insurance, as well as an automobile lease and


insurance
      allowance equal to $24,000 per year. He was granted an option


to
      purchase 1,000,000 shares of common stock on April 21, 2003.





(2)
      During 2004, Dr. David Dalton earned a salary of $396,000, plus
      life,


health
      and disability insurance, as well as an automobile lease and


insurance
      allowance equal to $24,000 per year.




Employment
      Agreements





Dr.
      David
      Dalton provides the amount of time necessary to perform his


corporate
      duties. Dr Dalton's salary was $396,000 for 2004, plus a bonus


determined
      by the agreement of Dr. Dalton and the Compensation Committee. On


each
      January 1, the base salary will be increased by an amount agreed upon
      by


Dr.
      Dalton and the Compensation Committee. The agreement also provides
      Dr.


Dalton
      with an option to purchase 2,000,000 shares of Common Stock at an


exercise
      price of $.24 per share, vesting 500,000 shares on the first


anniversary
      of the agreement, and an additional 41,667 shares vesting each
      month


following
      the initial vesting date. The unexpired term of the agreement will
      be


extended
      automatically by one year on each January 1 following the date of
      the


agreement,
      such that the unexpired term of the agreement will at all times not


be
      less
      than two years following each extension. The agreement provides for


payment
      by Univec of annual premiums on a term life insurance policy with a
      face


amount
      of
      $2 million. The agreement also provides for health and disability


benefits,
      as well as an automobile lease and insurance allowance equal to


$24,000
      per year. Under the terms of the agreement, Dr. Dalton is entitled to
      a


severance
      payment equal to his highest annual base salary during the term for


the
      remainder of the term if the agreement is terminated by Dr. Dalton for
      good


reason,
      or in the event of a change in control of Univec.





Stock
      Options





The
      following table contains information concerning the grant of stock


options
      to Dr. David Dalton ( the "Named Executive Officer") during the
      fiscal


year
      ended December 31, 2004.





Number
                of Shares
            Percent
                of Total OptionsUnderlying
                Options
            Granted
                to Employees in
            Exercise
                Price
            ExpirationName
            Granted
            Fiscal
                Year
            Per
                Share
            DateDr.
                David Dalton
            -
            0%
            $0.00
            N/A










-16-





AGGREGATED
      OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR
      VALUES





The
      following table summarizes for Dr. Dalton the total number of


shares
      acquired upon exercise of options during the year ended December
      31,


2004,
      and
      the value realized (fair market value at the time of exercise less


exercise
      price), the total number of unexercised options, if any, held at


December
      31, 2004, and the aggregate dollar value of in-the-money,
      unexercised


options,
      held at December 31, 2004. The value of the unexercised,
      in-the-money


options
      at December 31, 2004, is the difference between their exercise or
      base


price,
      and the fair market value of the underlying Common Stock on December
      31,


2004.
      The
      closing bid price of the Common Stock on December 31, 2004 was
      $0.11.







Shares
                Acquired Upon
            Number
                of Securities
            In-The-MoneyExercise
                of Options
            Underlying
                Unexercised
            Options
                atDuring
                Fiscal 2004
            Options
                at December 31, 2004
            December
                31, 2004Name
            Number
            Value
                Realized
            Exercisable
            Unexercisable
            Exercisable
            UnexercisableDr.
                David Dalton
            None
            None
            2,500,000
            500,000
            $40,000
            $
                -





Certain
      Transactions





At
      December 31, 2004, the following Deferred Payroll was payable to


executive
      officers and other employees:







David
                Dalton, Chief Executive Officer and President
            $
                856,000Raphael
                Langford, Chief Operating Officer
            127,585Michael
                Lesisko, Secretary - Treasurer
            97,3001,080,885Other
                employees
            190,603$
                1,271,488







On
      July
      3, 2003, the Company authorized the issuance of 500,000 shares of


common
      stock to Richard Mintz, a Director of the Company, at $0.02 per share in
      full


discharge
      of a $10,000 note payable.





At
      December 31, 2004, notes payable to companies owned by David
      Dalton,


President,
      amounted to $578,800. These loans are the result of providing
      working


capital
      to the Company.





At
      December 31, 2004, notes payable to David Dalton, President
      amounted


to
      $100,000 and notes payable to S. Robert Grass, Chairman of the Board
      of


Directors
      amounted to $153,300. These amounts were advanced to the Company at


terms
      and
      rates similar to commercial bank provisions. The funds were
      provided


to
      the
      Company for working capital operating needs.





On
      February 5, 2004, the Series E preferred stockholder exchanged 50


preferred
      shares plus $1,170 accrued dividends for 799,371 shares of Common


Stock
      at
      $0.064 per share On December 8, 2004 this the Series E preferred


stockholder
      exchanged 30 preferred shares plus $2,008 accrued dividends for


990,970
      shares of Common Stock at $0.0323 per share





On
      February 15, 2004, two executive officers exchanged a combined


$50,000
      of accrued Payroll for 500,000 common shares at $0.10 per share.
      These


exchanges
      were authorized by the Company's Board of Directors on August 5,
      2003.





On
      April
      16, 2004, the Company's Chief Executive Officer exchanged


$108,104
      of employment Contract benefits for 1,403,948 common shares. On August


31,
      2004,
      the Chief Executive Officer exchanged an additional $17,158 of


employment
      contract benefits for 256,087 common shares. These exchanges


were
      authorized by the Company's Board of Directors on August 5, 2003







-17-





Item
      11.
      Security Ownership of Certain Beneficial Owners and Management





The
      following table sets forth certain information concerning the


beneficial
      ownership of the Common Stock as of August 31, 2005 by (i) each


stockholder
      known by the Company to be a beneficial owner of more than five


percent
      of the outstanding Common Stock, (ii) each director of the Company
      and


each
      Named Executive Officer and (iii) all directors and officers as a
      group.











Amount
                and Nature of Beneficial
            Percentage
                of common Stock BeneficiallyName
            Ownership
                (1)
            Owned
                (2)David
                Dalton (4)
            23,396,378(5)
            39.40%
                (6)S.
                Robert Grass (4)
            1,065,951
                (9)
            1.87%
                (10)William
                Wooldridge (4)
            250,000
                (13)
            0.44%
                (14)Raphael
                Langford (4)
            3,366,667
                (7)
            5.85%
                (8)Michael
                Lesisko (4)
            2,474,001
                (11)
            4.31%
                (12)All
                directors and executiveofficers
                as a group (5 persons)
            30,552,997
                (3)(16)
            49.02%
                (17)Emerald
                Capital Partners LP
            6,000,000
            10.63%
                (15)





(1)
      Unless otherwise indicated, each person has sole investment and
      voting


power
      with respect to the shares indicated, subject to community property


laws,
      where applicable. For purposes of computing the percentage of


outstanding
      shares held by each person or group of persons named above as


of
      August
      31, 2005 any security which such person or group of persons has


the
      right
      to acquire within 60 days after such date is deemed to be


outstanding
      for the purpose of computing the percentage ownership for such


person
      or
      persons, but is not deemed to be outstanding for the purpose of


computing
      the percentage ownership of any other person.





(2)
      Except as otherwise stated, calculated on the basis of 56,464,432 shares
      of


Common
      Stock issued and outstanding on August 31, 2005.





(3)
      For
      purposes of this calculation, shares of Common Stock beneficially
      owned


by
      more
      than one person have only been included once.





(4)
      Address is c/o the Company, 4810 Seton Drive, Baltimore, Maryland
      21215.





(5)
      Includes 2,916,674 shares issuable upon exercise of presently
      exercisable


options.





(6)
      Calculated on the basis of 59,381,106 shares of Common Stock issued
      and


outstanding.




(7)
      Includes 1,133,333 shares issuable upon exercise of presently
      exercisable


options.





(8)
      Calculated on the basis of 57,597,765 shares of Common Stock issued
      and


outstanding.





(9)
      Includes 312,501 shares issuable upon conversion of Series D
      Preferred


Stock
      and
      250,000 issuable upon exercise of presently exercisable options.





(10)
      Calculated on the basis of 57,026,933 shares of Common Stock issued
      and


outstanding.





(11)
      Includes 1,000,000 shares issuable upon exercise of presently
      exercisable


options.





(12)
      Calculated on the basis of 57,464,432 shares of Common Stock issued
      and


outstanding.





(13)
      Includes 250,000 shares issuable upon exercise of presently
      exercisable


options.





(14)
      Calculated on the basis of 56,714,432 shares of Common Stock issued
      and


outstanding.





(15)
      Calculated on the basis of 56,714,432 shares of Common Stock issued
      and


outstanding.







-18-





(16)
      Includes 5,862,508 shares issuable upon exercise of presently
      exercisable


options.





(17)
      Calculated on the basis of 56,464,432 shares of Common Stock issued
      and


outstanding.








Item
      12.
      Certain Relationships and Related Transactions





During
      2003, Univec received a line of credit from Dr. David Dalton,


President
      and Chief Executive Officer, and S. Robert Grass, Chairman of the


Board
      of
      prime plus 2%, per annum. This line of credit was issued under the
      same


terms
      as
      an underlying line of credit which Dr, Dalton and Mr. Grass received


from
      a
      commercial bank. As of December 31, 2004, the outstanding balance of this
      loan


was
      $200,000.





During
      February 2004, Univec borrowed $50,000 from Mr. S. Robert Grass,


Chairman
      of the Board of Directors, repayable on demand at prime plus 2%,
      per


annum.





During
      the years ended December 31, 2004 and 2003, Univec has borrowed an


aggregate
      of $388,305 from Pharmacy Services, Inc., Health Resources, Inc.
      and


other
      companies all owned by Dr. David Dalton, President and Chief
      Executive


Officer.
      These loans are repayable on demand at 10%, per annum. At December
      31,


2004
      and
      2003, the aggregate balance outstanding was $578,800 and $378,569,


respectively.





During
      2004, Pharmacy Services, Inc., a company owned by Dr. David Dalton,


President
      and Chief Executive Officer, purchased $19,388,572 from PPSI's GPO.


This transaction
        represented 99% of total revenue.


PPSI
      shares office space and other administrative expenses with
      affiliated


companies
      owned by Dr. David Dalton, the Chief Executive Officer of Univec.


These
      expenses have not been allocated between the companies, but PPSI's
      portion


would
      be
      insignificant.











Item
      l3.
      Exhibits and Reports on Form 8-K.





(a)
      Exhibits





Exhibit                                      
      Description







2.1(1)
      Stock Purchase Agreement and Plan of Reorganization made and
      entered


into
      as of
      December 31, 2001, by and among Physician and Pharmaceutical


Services,
      Inc. ("PPSI"), the stockholder of PPSI and the Registrant.





2.2(2)
      Stock Purchase Agreement made and entered into as of February 28,
      2002,


by
      and among
      Thermal Waste Technologies, Inc. ("TWT"), the stockholders of TWT


and
      the
      Registrant.





3.1(4)
      Restated Certificate of Incorporation of the Registrant, as
      amended.





3.2(3)
      By-laws of the Registrant, as amended. 4.1(3) Agreement and Plan of


Merger
      dated
      as of October 7, 1996 between the Registrant and UNIVEC,


Inc.,
      a New
      York corporation.




4.3(3)
      Form of warrant between the Registrant and the underwriters of the


Registrant's
      initial public offering.





4.4(3)
      Specimen Common Stock Certificate.





4.5(3)
      Specimen Warrant Certificate (included as Exhibit A to Exhibit 4.3


herein).





4.6(3)
      Registration Rights Agreement among Registrant and the holders


of
      bridge
      warrants.





4.7(5)
      Certificate of Designation of Series B Preferred Stock. 4.8(6)


Certificate
      of Amendment of Certificate of Designation of Series B


Preferred
      Stock.





4.9(5)
      Form of Warrant Agreement dated July 27, 1998, between Company and


selling
      security-holder.





4.10(6)
      Form of Amended and Restated Warrant Agreement, amending and
      restating


the
      Warrant
      Agreement dated July 27, 1998, between the Company and the


selling
      security-holder.






-19-





4.11(5)
      Registration Rights Agreement dated July 27, 1998, between the


Company'
      and
      selling security-holder.





4.12(6)
      Registration Rights Agreement, dated February 8, 1999, between the


Company
      and
      the selling security-holder.





4.13(6)
      Certificate of Designation of Series C Preferred Stock. 4.14(6)
      Form


of
      Warrant
      Agreement dated February 8, 1999. between the Company


and
      selling
      security-holder.





10.1(3)
      Amended 1996 Stock Option Plan of the Registrant.





10.2(7)
      1998 Stock Option Plan of the Registrant.





10.3(8)
      2000 Stock Option Plan of the Registrant.





10.4(7)
      Employment Agreement dated as of September 4, 1998 between the


Registrant
      and Joel Schoenfeld.





10.5(9)
      Patent License Agreement dated August 16, 2000 by and between the


Company
      and
      Terumo Europe, NV.





10.6(9)
      Manufacturing Agreement dated August 16, 2000, by and between the


Company
      and
      Terumo, N.V.





10.7(9)
      Equipment Purchase Agreement dated August 16, 2000, by and between


the
      Company
      and Terumo Europe, N.V.





10.10(9)
      Employment Agreement dated as of January 1, 2002, between the


Registrant
      and David L. Dalton.





10.11
      Employment Agreement dated as of December 31, 2001, between the


Registrant
      and Joel Schoenfeld.





21.1(3)
      List of Subsidiaries.





31.1(10)
      Statement of the Chief Executive Officer pursuant toSection
      302 of the Sarbanes-Oxley
      Act of 2002.




31.2(10)
      Statement of the Chief Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley
      Act of 2002.


32.1(10)
      Statement of the Chief
      Executive Officer pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.




32.2(10)
      Statement of the Chief
      Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley
      Act of 2002.





(1)
      Incorporated by reference to the Registrant's Form 8K filed January


4,
      2002.





(2)
      Incorporated by reference to the Registrant's Form 8K filed March
      11,


2002.





(3)
      Incorporated by reference from the Registrant's Registration


Statement
      on
      Form SB-2 (File No. 333-20187) declared effective on


April
      24,
      1997.




(4)
      Incorporated by reference from the Registrant's Periodic Quarterly


Report
      on
      Form 10-QSB for the fiscal quarter ended September 30,


2000.





(5)
      Incorporated by reference from the Registrant's Registration


Statement
      on
      Form S-3 (File No. 333-62261) declared effective


December
      11,
      1999.





(6)
      Incorporated by reference from Amendment No. 2 to the Registrant's


Registration
      Statement Form 10-S-3 (File 333-74199).





(7)
      Incorporated by reference to the Registrant's Annual Report on Form


10-KSB
      for
      the year ended December 31, 1998 (File No. 0-22413).





(8)
      Incorporated by reference from the Registrant's Post-Effective


Amendment
      No
      1 on Form S-2 to Form S-3 (File No. 333-74199) declared


effective
      on
      January 26, 2001.





(9)
      Incorporated by reference to the Registrant's Annual Report on Form


10-KSB
      for
      the year ended December 31, 2000 (File No. 0-22413).





(10)
      Filed herewith.





(b)
      Reports on Form 8-K filed during the fourth quarter 2003.





No
      Forms
      8-K were filed during the fourth quarter 2003.






-20-


Item
        14.
        Principal Accountant Fees and Services.





The
      following table presents the cost of Univec's principal
      accountants'


fees
      and
      services for the years ended December 31, 2004 and 2003,
      respectively:





**2004**
            ****
            **2003**Audit
                fees
            
            $
            110,261
            
            $
            98,794Audit
                related fees
            
            
            -
            
            
            -Tax
                fees
            
            
            18,750
            
            
            14,199All
                other fees
            
            
            -
            
            
            -Total
            
            $
            129,011
            
            $
            112,993





Univec's
      Audit Committee pre-approves the engagement of the principal


accountant
      and the estimated audit fee, by each category.





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act
      of


1934,
      the
      Registrant caused this report to be signed on its behalf by the


undersigned,
      thereunto duly authorized.







**UNIVEC,
                INC.**Date: September
                15, 2005
              By:
              /s/ Dr.
                David
                DaltonDr.
                David DaltonChief
                  Executive Officer
                (Principal
                  Executive Officer)





In
      accordance with the Securities Exchange Act of 1934, this report
      has


been
      signed below by the following persons on behalf of the Registrant on


November
      18,2005 in the capacities indicated.





Signatures    Title







/s/
      Dr. David Dalton  Chief
      Executive Officer and
      a Director


Dr.
      David
      Dalton                            
Principal Executive Officer)




/s/
      Michael Lesisko             
Chief Financial Officer,
      Treasurer, Secretary


Michael
      Lesisko




/s/
      S.
      Robert Grass               
Chairman and a Director


S.
      Robert
      Grass




/s/
      William Wooldridge       Director


William
      Wooldridge











-21-










UNIVEC,
      INC. AND SUBSIDIARIES


CONSOLIDATED
      FINANCIAL STATEMENTS


DECEMBER
      31, 2004 AND FOR THE TWO YEARS THEN ENDED





Index
      to
      Consolidated Financial Statements











PageReport
                  of Independent Registered Public Accounting Firm
              F--2Consolidated
                  Balance Sheet - December 31, 2004
              F--3Consolidated
                  Statements of Operations - years endedDecember 31, 2004 and 2003
              F--4Consolidated
                  Statements of Stockholders' Equity - yearsended December 31, 2004 and 2003
              F--5Consolidated
                  Statements of Cash Flows - years endedDecember 31, 2004 and 2003
              F--6Notes
                  to Consolidated Financial Statements
              F--7
                  to F--16













F-1







The
            Registrant’s auditor has amended their opinion of the 2003 financial statements
            as being “restated”.
  Report
            of
            Independent Registered Public Accounting Firm
 To
            the
            Board of Directors and
 Stockholders
            of Univec, Inc.
  We
            have
            audited the accompanying consolidated balance sheet of Univec, Inc. and
            Subsidiaries as of December 31, 2004 and the related consolidated statements
            of
            operations, stockholders' equity and cash flows for each of the years
            in the
            two-year period ended December 31, 2004. These consolidated financial
            statements
            are the responsibility of the Company's management.  Our responsibility is
            to express an opinion on these consolidated financial statements based
            on our
            audit.
 
 We
            conducted our audit in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). Those standards require that
            we plan
            and perform the audit to obtain reasonable assurance about whether the
            consolidated financial statements are free of material misstatement.
            The company
            is not required to have, nor were we engaged to perform, an audit of
            its
            internal control over financial reporting. Our audit included consideration
            of
            internal control over financial reporting as a basis for designing audit
            procedures that are appropriate in the circumstances, but not for the
            purpose of
            expressing an opinion on the effectiveness of the company’s internal control
            over financial reporting. An audit also includes examining, on a test
            basis,
            evidence supporting the amounts and disclosures in the consolidated financial
            statements, assessing the accounting principles used and significant
            estimates
            made by management, as well as evaluating the overall consolidated financial
            statement presentation. We believe that our audits provide a reasonable
            basis
            for our opinion. We also audited the adjustments described in Note 2
            that were
            applied to restate the 2003 financial statements. In our opinion, such
            adjustments are appropriate and have been properly applied.
 
 In
            our
            opinion, the consolidated financial statements referred to above present
            fairly,
            in all material respects, the consolidated financial position of Univec,
            Inc. as
            of December 31, 2004 and the consolidated results of their operations
            and their
            consolidated cash flows for each of the years in the two-year period
            ended
            December 31, 2004 in conformity with accounting principles generally
            accepted in
            the United States of America.
 
 The
            accompanying consolidated financial statements have been prepared assuming
            that
            the Company will continue as a going concern. As discussed in Note 3
            to the
            consolidated financial statements, the Company has suffered from recurring
            losses from operations, has negative working capital, has a total stockholders’
deficit and is in default on certain debt, all of which raise substantial
            doubt
            about its ability to continue as a going concern. Management’s plans in regard
            to these matters are also discussed in Note 3. The consolidated financial
            statements do not include any adjustments that might result from the
            outcome of
            this uncertainty.
  Abrams,
                    Foster,
                    Nole & Williams, P.ARevised
                    November 4, 2005
                  By:
                  /s/ Abrams,
                    Foster, Nole & Williams, P.AAbrams,
                    Foster, Nole & Williams, P.ABaltimore,
                    Maryland










F-2


The
            Company has labeled the appropriate 2003 financial statements as being
            “restated”. Also, the Company has referred to the footnote which describes the
            restatement.


**Univec,
                  Inc. and Subsidiaries**
              ******Consolidated
                  Balance Sheet**
              ******December
                  31, 2004****ASSETS**Cash
              
              $
              29,443Marketable
                  securities
              
              
              36,349Accounts
                  receivable
              
              
              3,123,493Inventories
              
              
              179,878Certificates
                  of deposit - restricted
              
              
              340,407Other
                  current assets
              
              
              46,630Total
                  current assets
              
              
              3,756,200Fixed
                  assets, net
              
              
              622,685Other
                  assets
              
              
              79,468Total
                  assets
              
              $
              4,458,353**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**Accounts
                  payable and accrued expenses
              
              $
              4,380,826Deferred
                  payroll
              
              
              1,271,488Notes
                  and loans payable - current
              
              
              1,472,163Loans
                  payable - officers/directors
              
              
              260,493Due
                  to affiliated companies
              
              
              578,800Total
                  current liabilities
              
              
              7,963,770Notes
                  and loans payable - long-term
              
              
              211,852Total
                  liabilities
              
              
              8,175,622Commitments
                  and contingencies (Notes 3, 4, 12 and 13)STOCKHOLDERS'
                  DEFICITPreferred
                  stock $.001 par value; 3,743,500 sharesauthorized;
                  none issued and outstandingSeries
                  D 5% cumulative convertible preferred stock,$.001
                  par value; authorized: 1,250,000; issued andoutstanding:
                  125,000 shares (aggregate liquidationvalue:
                  $336,808)
              
              
              125Series
                  E cumulative convertible preferred stock,$.001
                  par value; authorized: 2,000 shares; issued andoutstanding:
                  412 shares (aggregate liquidationvalue:
                  $441,397)
              
              
              1Common
                  stock $.001 par value; authorized: 75,000,000 shares;
              
              
              45,619issued:
                  45,618,852 and outstanding: 45,214,698 sharesAdditional
                  paid-in capital
              
              
              10,977,627Treasury
                  stock, 404,154 shares - at cost
              
              
              (28,291
              )Stock
                  Subscription Receivable
              
              
              (210,000
              )Accumulated
                  deficit
              
              
              (14,502,350
              )Total
                  stockholders' deficit
              
              
              (3,717,269
              )Total
                  liabilities and stockholders' deficit
              
              **$**
              4,458,353
   F-3


**Univec,
                        Inc. and Subsidiaries****Consolidated
                        Statement of Operations****Years
                        ended December 31, 2004 and 2003**
 **Year-Ended**
                    
                    **Year-Ended****Dec.
                        31, 2004**
                    
                    **Dec.
                        31, 2003**
                    
                    **Restatements****Amended**
                    
                    **Original
                        Filing**
                    
                    **(note
                        2)**
                    
                    **Restated**Revenues
                    
                    $
                    19,448,388
                    
                    $
                    16,133,652
                    
                    $
                    844,170
                    
                    $
                    16,977,822Cost
                        of revenues
                    
                    
                    19,249,494
                    
                    
                    15,722,885
                    
                    
                    1,263,680
                    
                    
                    16,986,565Gross
                        Margin
                    
                    
                    198,894
                    
                    
                    410,767
                    
                    
                    (419,510
                    )
                    
                    (8,743
                    )Operating
                        ExpensesMarketing
                        and selling
                    
                    
                    123,400
                    
                    
                    387,769
                    
                    
                    (8,031
                    )
                    
                    379,738Product
                        development
                    
                    
                    28,871
                    
                    
                    28,617
                    
                    
                    (70
                    )
                    
                    28,547General
                        and administrative
                    
                    
                    1,772,246
                    
                    
                    1,478,913
                    
                    
                    (631,900
                    )
                    
                    847,0131,924,517
                    
                    
                    1,895,299
                    
                    
                    (640,001
                    )
                    
                    1,255,298Loss
                        from Operations
                    
                    
                    (1,725,623
                    )
                    
                    (1,484,532
                    )
                    
                    220,491
                    
                    
                    (1,264,041
                    )Other
                        Income (Expense)Interest
                        expense, net
                    
                    
                    (108,092
                    )
                    
                    (85,941
                    )
                    
                    (5,623
                    )
                    
                    (91,564
                    )Gain
                        on extinguishments of debt
                    
                    
                    144,819
                    
                    
                    24,872
                    
                    
                    
                    
                    
                    24,872Loss
                        on write-off of goodwill
                    
                    
                    (1,774,119
                    )
                    
                    -
                    
                    
                    
                    
                    
                    -Loss
                        on sale of subsidiary
                    
                    
                    (597,056
                    )
                    
                    -
                    
                    
                    
                    
                    
                    -Other
                        income
                    
                    
                    47,795
                    
                    
                    -
                    
                    
                    
                    
                    
                    -Loss
                        on write-off of capitalized lease
                    
                    
                    
                    
                    
                    
                    
                    
                    (121,366
                    )
                    
                    (121,366
                    )Total
                        other expenses
                    
                    
                    (2,286,653
                    )
                    
                    (61,069
                    )
                    
                    (126,989
                    )
                    
                    (188,058
                    )Loss
                        from continuing operations
                    
                    
                    (4,012,276
                    )
                    
                    (1,545,601
                    )
                    
                    93,502
                    
                    
                    (1,452,099
                    )Loss
                        from discontinued operations
                    
                    
                    (8,260
                    )
                    
                    -
                    
                    
                    (93,502
                    )
                    
                    (93,502
                    )Net
                        loss
                    
                    
                    (4,020,536
                    )
                    
                    (1,545,601
                    )
                    
                    -
                    
                    
                    (1,545,601
                    )Dividends
                        attributable to preferred stock
                    
                    
                    (35,921
                    )
                    
                    (39,025
                    )
                    
                    -
                    
                    
                    (39,025
                    )Loss
                        attributable to common stockholders
                    
                    $
                    (4,056,457
                    )
                    $
                    (1,584,626
                    )
                    $
                    -
                    
                    $
                    (1,584,626
                    )Share
                        informationBasic
                        net loss per common share
                    
                    $
                    (0.11
                    )
                    $
                    (0.05
                    )
                    $
                    -
                    
                    $
                    (0.05
                    )Basic
                        weighted average numberof
                        common shares outstanding
                    
                    
                    38,510,467
                    
                    
                    33,751,508
                    
                    
                    -
                    
                    
                    33,751,508See
                        notes to consolidated financial statements.


F-4
 **Univec,
          Inc. and Subsidiaries**
 **Consolidated
            Statement of Stockholders' Equity**
 **Years
            ended December 31, 2004 and 2003**
 
 
 **Series
                    A Preferred**
                ****
                **Series
                    B Preferred**
                ****
                **Series
                    C Preferred**
                ****
                **Series
                    D Preferred**
                ****
                **Series
                    E Preferred**
                ****
                **Common
                    Stock**
                ****
                **Additional****Paid-in**
                ****
                **Treasury
                    Stock**
                ****
                **Prepaid****Consulting**
                ****
                **Accumulated**
                ****
                **Total****Stockholders'**
                ********
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Capital**
                ****
                **Shares**
                ****
                **Amount**
                ****
                **Services**
                ****
                **Deficit**
                ****
                **Equity**Balance,
                    January 1, 2003
                
                
                124
                
                $
                1
                
                
                167
                
                $
                1
                
                
                250
                
                $
                1
                
                
                104,167
                
                $
                104
                
                
                
                
                
                
                
                
                31,772,773
                
                $
                31,773
                
                $
                10,296,627
                
                
                
                
                
                
                
                
                
                
                
                ($8,843,338
                )
                $
                1,485,169Exchange
                    of Series B and Cfor
                    Series E
                
                
                
                
                
                
                
                
                (122
                )
                
                (1
                )
                
                (250
                )
                
                (1
                )
                
                
                
                
                
                
                
                522
                
                $
                1
                
                
                
                
                
                
                
                
                89,708
                
                
                
                
                
                
                
                
                
                
                
                (89,707
                )Common
                    stock
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                .issued
                    for Cash
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                500,000
                
                
                500
                
                
                19,500
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                20,000Consulting
                    fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                100,000
                
                
                100
                
                
                9,900
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,000Loans
                    payable - officers/directors
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                444,805
                
                
                444
                
                
                49,556
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                50,000Adjustment
                    to conversion of series A andoptions
                
                
                (124
                )
                
                (1
                )Convert
                    Series B
                
                
                
                
                
                
                
                
                (45
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,843,322
                
                
                1,841
                
                
                (1,843
                )Convert
                    Series E
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (30
                )
                
                
                
                
                340,909
                
                
                341
                
                
                (341
                )Exercise
                    of options by officer
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                166,667
                
                
                167
                
                
                6,500
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                6,667Options
                    issued
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                36,400
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                36,400Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,545,601
                )
                
                (1,545,601
                )Balance,
                    December 31, 2003
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                104,167
                
                
                104
                
                
                492
                
                
                1
                
                
                35,168,476
                
                
                35,169
                
                
                10,506,007
                
                
                
                
                
                
                
                
                
                
                
                (10,478,646
                )
                
                62,635Sale
                    of Series D
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                20,833
                
                
                21
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                49,979
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                50,000Common
                    stock issued forCashConsulting
                    fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                6,000,000
                
                
                6,000
                
                
                234,000
                
                
                
                
                
                
                
                
                ($240,000
                )Deferred
                    payroll and accruedexpenses
                    - officers
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,160,035
                
                
                2,160
                
                
                173,102
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                175,262Loans
                    payable - officers/directors
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                500,000
                
                
                500
                
                
                9,500
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,000Sale
                    of subsidiary
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,829
                
                
                404,154
                
                
                ($28,291
                )
                
                
                
                
                
                
                
                (25,462
                )Convert
                    Series E and dividends
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (80
                )
                
                
                
                
                1,790,341
                
                
                1,790
                
                
                (1,790
                )
                
                
                
                
                
                
                
                
                
                
                (3,168
                )
                
                (3,168
                )Amortization
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                30,000
                
                
                
                
                
                30,000Options
                    issued
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,000Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,020,536
                )
                
                (4,020,536
                )Balance,
                    December 31, 2004
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                125,000
                
                $
                125
                
                
                412
                
                $
                1
                
                
                45,618,852
                
                $
                45,619
                
                $
                10,977,627
                
                
                404,154
                
                
                ($28,291
                )
                
                ($210,000
                )
                
                ($14,502,350
                )
                
                ($3,717,269
                )
 
 
 
 See
            notes
            to consolidated financial statements.
  F-5





**Univec,
                  Inc. and Subsidiaries**
              ******Consolidated
                  Statement of Cash Flows**
              ******Years
                  ended December 31, 2004 and 2003**
              ****
  ****
              ****
              **2004**
              ****
              **2003**Cash
                  flows from operating activitiesNet
                  loss
              
              $
              (4,020,536
              )
              $
              (1,646,989
              )Adjustments
                  to reconcile net loss to net cashused in operating activitiesLoss on write-off of goodwill
              
              
              1,774,119Loss on sale of subsidiary
              
              
              481,719Depreciation and amortization
              
              
              189,008
              
              
              181,203Write-off of equipment
              
              
              57,295Valuation allowance for inventories
              
              
              75,000
              
              
              50,000Stock based compensation
              
              
              4,000
              
              
              76,400Loss (gain) on cancellation of capital lease
              
              
              (2,894
              )
              
              121,366Gain on extinguishment of debt
              
              
              (98,547
              )
              
              (24,872
              )Gain on receipt of marketable securities
              
              
              (36,349
              )Other
              
              
              (11,435
              )Changes
                  in assets and liabilities, net ofeffects from sale of TWTAccounts receivable
              
              
              (506,983
              )
              
              (2,293,183
              )Inventories
              
              
              17,698
              
              
              123,413Other current assets and other assets
              
              
              (3,320
              )
              
              7,727Accounts payable and accrued expenses
              
              
              713,610
              
              
              2,546,233Deferred payroll
              
              
              619,631
              
              
              536,933Escrow deposits
              
              
              
              
              
              (10,000
              )Net cash used in operating activities
              
              
              (747,984
              )
              
              (331,769
              )Cash
                  flows from investing activitiesPurchases of fixed assets (net of capitalizedlease obligation of $250,000 in 2003)
              
              
              (397,068
              )
              
              (1
              )Increase in restricted cash
              
              
              (340,407
              )Cash used in sale of subsidiary (net of notes andother payables of $103,600)
              
              
              (5,670
              )Net cash used in investing activities
              
              
              (743,145
              )
              
              (1
              )Cash
                  flows from financing activitiesProceeds from notes and loans payable,net of expenses of $80,146 in 2004
              
              
              1,104,343
              
              
              178,452Increase in due from affiliated companies
              
              
              567,194
              
              
              118,798Increase in loans payable - officers/directors
              
              
              54,000
              
              
              228,160Proceeds from sale of stock
              
              
              50,000
              
              
              20,000Payments on notes and loans payable
              
              
              (242,386
              )
              
              (226,954
              )Payments of capitalized lease obligations
              
              
              (21,232
              )
              
              (62,125
              )Dividends converted to preferred stock
              
              
              (3,168
              )Net cash provided by financing activities
              
              
              1,508,751
              
              
              256,331Net increase (decrease) in cash
              
              
              17,622
              
              
              (75,439
              )Cash,
                  beginning of period
              
              
              11,821
              
              
              87,260Cash,
                  end of period
              
              $
              29,443
              
              $
              11,821Supplemental
                  disclosure of cash flow informationCash paid for interest
              
              $
              48,709
              
              $
              102,961Supplemental
                  disclosures of noncash activityCommon stock issued in payment ofloans payable - officers/directors
              
              $
              10,000
              
              $
              20,000Common stock and options issued in payment
              
              $
              179,262of deferred payroll and accrued expensesConversions of Series E to common stock,including dividends
              
              $
              3,168
              
              $
              89,807Treasury stock received, net of options issued,on sale of subsidiary
              
              $
              (125,462
              )
   F-6





Univec,
      Inc. and Subsidiaries





Notes
      to
      Consolidated Financial Statements





1.
      Nature
      of Operations





Univec,
      Inc. (Company) produces, licenses and markets medical products, primarily
      syringes,


on
      a
      global basis. Physician and Pharmaceutical Services, Inc. (PPSI), a subsidiary,
      provides


pharmaceutical
      sample and group purchasing services of pharmaceutical products. Thermal
      Waste


Technologies,
      Inc. (TWT), a subsidiary until its sale, marketed a medical waste disposal
      unit.





2.
          Restatement
 The
            Company has corrected an error which occurred during the year ended December
            31,
            2003 in connection with the capitalized lease of equipment. The underlying
            fixed
            assets were purchased by an affiliated company owned by an officer of
            the
            company and leased to the Company. In 2003, the Company originally reported
            the
            payoff of the lease from proceeds of loans.
 
 The
            restatement recorded the reinstatement and subsequent write-off of the
            old
            capitalized lease and the capitalization of the new lease, which resulted
            in an
            additional prior period loss of $115,031, less than $0.01, per share.
 
 The
            new
            lease was for a term of three years and provided for monthly rent of
            $3,944 and
            a purchase option of $100,000 at the end of the lease term.
 
 The
            Company had capitalized the lease. The capitalized lease obligation and
            related
            assets were recorded at the lower of the present value of the minimum
            lease
            obligations or the fair value of the minimum lease obligations or the
            fair value
            of the related assets of $250,000.
 
 In
            July
            2004, the Company purchased the equipment under the lease for $250,000,
            effectively canceling the lease.
  The
            Company incurred $75,000 and $50,000 for the
            years 2004 and 2003, respectively, as a result of inventory write-downs,
            which
            have been revised to be reported as components of cost of sales.  Also,
            2003 rebates of  $381,949.00 have been revised to be reported as a
            reduction of revenue.
 Year-end
                      December 31, 2003 (net loss) as originally reported
                  
                  $
                  (1,545,601
                  )Increase
                      in net margin
                  
                  
                  12,439Increase
                      in net interest expense
                  
                  
                  (5,623
                  )Decrease
                      in depreciation expense
                  
                  
                  11,958Loss
                      on write-off of capital lease
                  
                  
                  (121,366
                  )General
                      and Administrative expense adjustment
                  
                  
                  101,388Miscellaneous
                      adjustments
                  
                  
                  _1,204Year-end
                      December 31, 2003 (net loss) as restated
                  
                  $
                  (1,545,601
                  )


3.
      Going
      Concern





The
      accompanying financial statements have been prepared on a going concern basis,
      which


contemplates
      the realization of assets and the satisfaction of liabilities in the normal
      course of


business.
      As of December 31, 2004, the Company had negative working capital of $4,207,570


and
      stockholders' deficit of $3,717,269 and had previously incurred net losses
      of
      $(4,020,536)


and
      $(1,646,989) for the years ended December 31, 2004 and 2003. The Company is
      also
      in


default
      of approximately $1,200,000, of loans and notes payable all of which are payable
      on


demand
      as
      a result of such defaults.
      These factors, among others, indicate that the Company's


continuation
      as a going concern
      is dependent upon its ability to obtain adequate financing


and/or
      achieve profitable operations.
      The financial statements do not include any adjustments


related
      to the recoverability and
      classification of recorded asset amounts or the amounts and


classification
      of liabilities that might
      be
      necessary should the Company be unable to continue


in
      existence.





Management
      is currently seeking additional investment capital to support its entrance
      into


new
      business ventures and provide the capital needed to operate.





4.
      Significant Accounting Policies





Basis
      of
      Presentation





The
      consolidated financial statements include all the accounts of the
      Company


and
      its
      wholly-owned subsidiaries, Physician and Pharmaceutical Services, Inc.


(PPSI),
      Thermal Waste Technologies, Inc. (TWT), until its sale and Rx Ultra, Inc.
      (inactive). All


material
      inter-company balances and transactions have been eliminated. The consolidated
      financial


statements
      include all the accounts of Thermal Waste Technologies, Inc. until its sale





Accounts
      Receivable





Accounts
      receivable consisted of receivables from customers. The Company


records
      a
      provision for doubtful receivables, if necessary, to allow for any


amounts
      which may be unrecoverable and is based upon an analysis of the


Company's
      prior collection experience, customer creditworthiness, and current


economic
      trends. As of December 31, 2004, no allowance was necessary.





Inventories





Inventories
      are valued at the lower of cost, determined by the first-in,


first-out
      method, or market.







F-7







Fixed
      Assets





Fixed
      assets are stated at cost, less accumulated depreciation, and are


depreciated
      on a straight-line basis over the estimated useful lives of seven
      years.


Maintenance
      and repairs are charged to expense as incurred; renewals and
      improvements


which
      extend the life of assets are capitalized. Upon retirement or disposal,


the
      asset
      cost and related accumulated depreciation and amortization are
      eliminated


from
      the
      respective accounts and the resulting gain or loss, if any, is included
      in


the
      results of operations.





The
      carrying value of fixed assets is evaluated whenever changes in


circumstances
      indicate the carrying amount of such assets may not be


recoverable.
      If necessary, the Company recognizes an impairment loss for the


difference
      between the carrying amount of the assets and their estimated fair


value.
      Fair value is based on current and anticipated future undiscounted cash
      flows.





Shipping
      Income and Expense





Shipping
      income is included in product sales. Shipping expenses are included


in
      marketing and selling.




Product
      Development





Research
      and development costs have been expensed as incurred.





Basic
      Loss per Share





Basic
      net
      loss per common share was computed based on the weighted average


number
      of
      common shares outstanding during the year. Dilutive net loss per
      share


has
      not
      been presented as they are anti-dilutive.





Revenue
      Recognition





Product
      sales are recognized when products are shipped. Although the
      Company


warrants
      its products, it is unable to estimate the future costs relating to


warranty
      expense and, as such, recognizes warranty expenses as incurred.
      Revenues


for
      PPSI's group purchasing service are recognized when the products are
      shipped.





Stock
      Based Compensation





Compensation
      cost for stock, stock options, warrants, etc., issued to


employees
      and non-employees is based on the fair value method.





Income
      Taxes





Deferred
      income taxes have been provided for temporary differences between
      financial


statement
      and income tax reporting under the liability method , using expected tax rates
      and laws


that
      are
      expected to be in effect when the differences are expected to reverse. A
      valuation


allowance
      is provided when it is more likely than not , that the deferred tax assets
      will
      not be


realized.





Estimates





The
      preparation of financial statements in conformity with generally


accepted
      accounting principles requires management to make estimates and


assumptions
      that affect the reported amounts of assets and liabilities and


disclosure
      of contingent assets and liabilities at the date of the financial


statements
      and the reported amounts of revenues and expenses during the


reporting
      period. Actual results could differ from those estimates.





Fair
      Values





The
      carrying amounts of cash, accounts receivable, accounts payable and


accrued
      expenses, notes and loans payable and deferred payroll approximate
      their


fair
      values.











F-8





New
      Accounting Pronouncements





Financial
      Accounting Standards Board Statement # 123R, Stock Based
      Compensation,


effective
      for the year ended December 31, 2006, has not been analyzed to determine if
      it
      will


have
      a
      material effect on the Company’s financial statements.





Management
      does not believe that any other recently issued, but not yet
      effective


accounting
      pronouncements, if adopted, would have a material effect on the


accompanying
      financial statements.





5.
      Marketable Securities





As
        of
        December 31, 2004, marketable securities consisted of an investment in an
        equity security,
 with
        a
        fair market value of $36,349. Management has classified the investment as
        available-for-sale.
 The
        Company received this security in December 2004 upon the conversion from
        a
        mutual to a
 stock
        insurance company in which Univec had owned a policy.
 
 In
        January 2005, the security was sold for $36,101.




6.
      Inventories





Inventories
      consisted of the following:






Raw
                materials
            
            $
            152,252Work-in-process
            
            
            89,740Finished
                goods
            
            
            62,886304,878Less:
                allowance for valuation
            
            
            (125,000
            )$
            179,878





The
      Company provided a $75,000 and $50,000 valuation allowance in 2004


and
      2003,
      respectively.





7.
      Fixed
      Assets





Fixed
      assets consisted of the following:






Equipment
            
            $
            1,100,784Less:
                accumulated depreciation
            
            
            478,099$
            622,685








As
      of
      December 31, 2004, the Company wrote-off fixed assets located at former
      suppliers


with
      a
      cost of $371,764 and a net book value of $85,088.





Depreciation
      expense was $128,901 and $174,541 in 2004 and 2003, respectively. For the
      year


ended
      December 31, 2004, fully depreciated assets were approximately
      $43,000.




F-9





8.
      Notes
      and Loans Payable





As
      of
      December 31, 2004, notes and loans payable consisted of:






Loan
                    due to a shareholder through July, 2009,with
                    interest at 4% (1) (3)
                
                $
                500,000Loans
                    payable to agencies for economicdevelopment payable at $9,230 per month untilJuly 2009, with interest at 4% per annum (1) (3)
                
                
                470,208Loan
                    payable to a vendor without specificpayment terms or interest (2)
                
                
                211,852Loan
                    payable to a vendor without, specific interest (3)
                
                
                135,000Loan
                    payable to a vendor due April 30, 2007with interest at prime plus 2% per annum (3)
                
                
                105,516Notes
                    payable on August 14, 2005, with interest at 8%
                
                
                85,000Note
                    payable on to a former officer upon sale ofsubsidiary due June 2005, without specific interest
                
                
                60,000Notes
                    payable on June 2005, with interest at 12%,per annum
                
                
                55,000Notes
                    payable to a shareholder's trusts, with interestat 12%, per annum (2)
                
                
                27,000Other
                
                
                34,4381,684,014Less:
                    Current portion of notes and loans payable
                
                
                1,472,162$
                211,852






(1)
      On
      July 23, 2004, the Company borrowed an aggregate of $500,000 from the City
      of


Baltimore
      Development Corporation and the Maryland Department of Business and
      Economic


Development
      payable in aggregate equal monthly installments of $9,230 over five
      years,


with
      interest at 4%, per annum. Proceeds are to be used to purchase equipment of


$450,000,
      which together with certain other equipment of the Company, collateralize


the
      borrowings. The borrowings also required deposits of $335,000 and an irrevocable


standby
      letter of credit of $200,000. Loans from certain officers and directors of


approximately
      $180,000 have been subordinated.




As
      required under the borrowings, the Company has obtained a revolving line of
      credit


of
      $500,000 from a stockholder of the Company under which the Company may borrow
      for


working
      capital through July 22, 2009. Loans under the line bear interest at the
      prime


rate,
      plus 2%, per annum, and may be converted into common stock at $.065, per share,
      as


defined.
      If the line of credit is terminated within one year, there is a penalty of
      up
      to


90
      days
      of interest. The Maryland Department of Business and Economic Development
      has


guaranteed
      80% of the loan and interest thereon. In July 2004, the Company borrowed
      $500,000


under
      the
      line of credit. As of December 31, 2004, interest rate was 7%, per annum.




Financing
      expenses in connection with these borrowings were $80,146 and will be
      amortized


over
      the
      term of the borrowings.




(2)
      Subject to forgiveness upon the vendor's sale of shares of the
      Company’s


common
      stock.




(3)
      In
      default due to either noncompliance or late payments. As a result of
      these


defaults,
      the Company has reclassified long-term debt of $457,376 to current.





9.
      Due to
      Affiliated Companies





Due
      to
      affiliated companies, owned by the chief executive officer of


the
      Company, on demand, with interest at 10%, per annum.





10.
      Loans
      Payable - Officer/Directors





As
      of
      December 31, 2004, loans payable - officer / directors consisted
      of:





Note
                payable to the chief executive officerand
                the chairman of the board of theCompany,
                due on demand, with interestat
                prime, plus 2%, per annum (1)
            
            $
            200,000Note
                payable to a director
            
            
            53,300Others
            
            
            7,193$
            260,493







F-10











(1)
      The
      same terms as an underlying borrowing from a bank and collateralized
      by


certain
      equipment. As of December 31, 2004 the interest rate was 7%, per
      annum.





11.
      Income Taxes


The
      Company files consolidated income tax returns with its
      subsidiaries.


Prior
      to
      its acquisition, PPSI was a Subchapter S Corporation.





As
      of
      December 31, 2004, the Company had net operating loss carry
      forwards


of
      approximately $15,250,000 available to reduce future taxable income
      expiring


through
      2024, which may be limited due to ownership changes.





For
      the
      years ended December 31, 2004 and 2003, the Company's deferred tax


benefits
      (expenses) were as follows:





**2004**
            
            **2003**Net
                operating loss carry forwards
            
            $
            615,000
            
            $
            200,000Depreciation
            
            
            191,000
            
            
            184,000Goodwill
            
            
            (19,000
            )
            
            (59,000
            )Compensation
            
            
            132,000
            
            
            200,000Inventory
                and equipment valuationallowances
            
            
            60,000Valuation
                allowance
            
            
            (830,000
            )
            
            (525,000
            )None
            
            
            None





As
      of
      December 31, 2004, the tax effects of the components of deferred
      tax


assets
      and liabilities were as follows:





Deferred
                tax assetsNet
                operating loss carry forwards
            
            $
            5,352,000Compensation
            
            
            482,000Depreciation
            
            
            183,000Total
                deferred tax asset
            
            
            6,017,000Deferred
                tax liabilitiesGoodwill
            
            
            (120,000
            )Net
                deferred tax asset
            
            
            5,897,000Valuation
                allowance
            
            
            (5,897,000
            )None





As
      of
      December 31, 2004, realization of the Company's net deferred tax
      asset


of
      approximately $5,425,000 was not considered more likely than not
      and,


accordingly,
      a valuation allowance of $5,425,000 was provided.





The
      following is a reconciliation of expected income tax benefit
      utilizing


the
      Federal statutory tax rate to income tax benefit reported on the
      statement


of
      operations.





**2004**
            ****
            **2003**Expected
                income tax benefit
            
            $
            (437,000
            )
            $
            (303,000
            )Change
                in valuation allowance arising in current year
            
            
            1,164,000
            
            
            504,000State
                income tax benefit, net of federal income tax effect
            
            
            (107,000
            )
            
            (75,000
            )Other
            
            
            (620,000
            )
            
            (126,000
            )None
            
            
            None










F-11











12.
      Commitments and Contingency





Lease





The
      Company is committed under a non-cancelable lease for production,


storage
      and office space through July 2005. The lease provides for minimum


annual
      rent of $72,000, additional rents for the Company's share of normal


maintenance
      plus its pro-rata share of real estate taxes and eight one year


renewals
      at the Company's option.





For
      2004
      and 2003, total rent expense was $73,200 and $77,439, respectively.





Employment
      Agreement





The
      Company is committed under an employment agreement to the chief


executive
      officer, through January 2005, requiring annual compensation


to
      be
      determined annually by the officer and Company. Annually, the
      agreement


shall
      automatically renew for one year, resulting in a new three year term
      each


January
      1. For the years ended December 31, 2004 and 2003, the compensation
      was


$396,000
      and $360,000, respectively, which have been deferred by the chief executive


officer.
      The agreement also provides for bonuses, as determined by the officer and


the
      Company, an automobile allowance (of $24,000, per annum, for 2004) and life,


disability
      and health insurance. In addition, the officer was granted options to


purchase
      2,000,000 shares of common stock exercisable at $.24, per share,
      through


2012.
      The
      options vest 25% on January 1, 2003 and 41,667 during each subsequent
      month.





13.
      Litigation Reserve





In
      December 2003, the Company assigned certain of their patents,
      earned


royalties
      of $72,125 and 85% of all future royalties being earned from these


patents
      in payment of a note payable and interest thereon for an aggregate
      of


$99,434,
      in settlement to a collection matter. The Company recognized a
      $24,872


gain
      upon
      extinguishment of the debt. The Company in turn received relief
      from


the
      restrictive patent payments and a perpetual license to exploit, market
      and


manufacture
      these patents in North America. As the value of the license
      received


could
      not
      be determined, no value was assigned to them.





In
      March
      2004, the Company settled a collection matter with a former


consultant
      in the amount of $165,000, payable in varying amounts through March


2007
      and
      options to purchase 359,375 shares of common stock of the Company,
      all


of
      which
      have been accrued as of December 31, 2003.





In
      February 2000, a former consultant commenced an action against the


Company
      and its directors, alleging breach of contract and fiduciary duty,
      and


is
      seeking consulting fees in the amount of: (1) 250,000 shares of common
      stock,


(2)
      $192,000 and (3) costs of this action. The Company and counsel do
      not


believe
      the consulting fees are due and will continue to vigorously defend
      this


action.




14.
          Stockholders' Equity
  During
            2004, the Company was listed as a public company on the OTC Bulletin
            Board. All
            of the transactions reported in Note 14 - Stockholders’ Equity had fair market
            valuations based on the publicly listed closing prices of the Company’s common
            stock for the pertinent transaction dates. Such publicly listed valuations
            are
            in accordance with the guidance provided by SFAS 123 and EITF
            96-18
 Common
            Stock
 
 During
            the year ended December 31, 2003, the Company issued an aggregate of
            444,805
            shares of common stock to a stockholder and an officer in payment of
            notes and
            loans and deferred payroll of $20,000 and compensation of $30,000.
 
 In
            August
            2003, the Company sold 500,000 shares of common stock for $20,000.
 
 In
            December 2003, an officer exercised options to purchase 166,667 shares
            of common
            stock for $6,667.
 
 In
            December 2003, the Company issued 100,000 shares of common stock in exchange
            for
            financial consulting services of $10,000.
  During
            the year ended December 31, 2004, the Company issued an aggregate of
            2,660,034
            shares of common stock to a stockholder and three officers in payment
            of notes
            and loans of $10,000, deferred payroll of $$50,000 and benefits of
            $125,262.
  F-12
  
 
 In
            November 2004, the Company exchanged 6,000,000 shares of common
            stock
 for
            $240,000 of professional consulting services over a one-year term. As
            of
            December 31, 2004, the remaining balance of services to be rendered was
            $210,000, which is reflected as Stock Subscription Receivable in the
            Stockholders’ Deficit.
 
 During
            2004, the Company was listed as a public company on the OTC Bulletin
            Board. All
            of the transactions reported in the preceding discussion had fair market
            valuations based on the publicly listed closing prices of the Company’s common
            stock for the pertinent transaction dates. Such publicly listed valuations
            are
            in accordance with the guidance of SFAS 123 and EITF 96-18.
 
 Preferred
            Stock
  During
            the year ended December 31, 2002, 31.5 shares of Series B were converted
            into
            949,464 shares of common stock at prices of $.0525 to $.15, per share.
            During
            the year ended December 31, 2003, 45 shares of Series B were converted
            into
            1,843,322 shares of common stock at prices of $.0163 to $.0325, per
            share.
 
 Series
            D
 
 The
            Company has designated 1,250,000 shares of 5% cumulative convertible
            preferred
            stock (Series D), which are entitled to receive, prior to the payment
            of
            dividends to the common stock, cumulative dividends of 5%, per share,
            per annum.
            The Series D stock may be redeemed at the option of the Company, in cash
            at
            $2.40, per share. In addition, Series D stockholders are entitled to
            a
            liquidation preference of $2.40, per share, plus unpaid dividends. Each
            share of
            Series D is initially convertible into three shares of common
            stock.
 
 In
            December 2004, the Company sold 20,833 shares of Series D preferred stock
            to a
            customer for $50,000. The Company will also sell similar amounts on March
            31,
            June 30,
 September
            30 and December 31, 2005.
  F-13
  
 Series
            E
 
 In
            August
            2003, the Company designated 2000 shares of 5% cumulative
            convertible
 preferred
            stock (Series E), which are entitled to receive, prior to the payment
            of
            dividends to the Series D and common stock, cumulative dividends of 5%,
            per
            share, per annum. The Series E stock may be redeemed at the option of
            the
            Company, in cash, at 135% of the stated value, per share, plus all unpaid
            dividends. In addition, Series E stockholders are entitled to a liquidation
            preference of $1,000, per share, plus all unpaid dividends. Each share
            of Series
            E is convertible into shares of common stock at the lesser of $1.10 or
            80% of
            market value, as defined. In August 2006, the Company is required to
            convert all
            the Series E into common stock at the conversion price, unless the holder
            becomes a 5% or greater stockholder. The Company may redeem the Series
            E in cash
            at $1,350, per share, plus all unpaid dividends, as defined.
 
 On
            August
            5, 2003, the Company exchanged 122 shares of Series B and 250 shares
            of Series
            C, all the outstanding shares, for 522 shares of Series E.
 
 In
            2004
            and 2003, 80 and 30 shares of Series E were converted into 1,790,341
            and 340,909
            shares of common stock at prices ranging from $.03 to $.09, per
            share.
 
 Holders
            of preferred shares have no voting rights.
 
 As
            of
            December 31, 2004, cumulative dividends in arrears on preferred stock
            were:
  Series
                      D
                  
                  $
                  36,736Series
                      E
                  
                  
                  30,994$
                  67,730
 
 
 Non
            Plan
            Options
 
 During
            the year ended December 31, 2003, the Company issued options to purchase
            an
            aggregate of 6,200,000 shares of common stock of the Company to officers,
            directors and others. The options are exercisable at $.04 to $.25, per
            share,
            through various dates until November 2008 and were valued at $36,400.
            Certain of
            these options to officers and directors vest over three years.
 
 During
            the year ended December 31, 2004, the Company issued options to purchase
            an
            aggregate of 1,050,000 shares of common stock of the Company to two officers
            and
            an employee. The options are exercisable at $.04, per share, through
            December
            2009 and were valued at $4,000.
 
 During
            2004 and 2003, options to purchase 4,850,000 and 1,763,941 shares, respectively,
            of common stock expired or were cancelled without being exercised.
 9.
 
 Reserved
            Shares
 
 As
            of
            December 31, 2004, the Company has reserved shares of common stock as
            follows:
 
  Non-plan
                      options and warrants
                  
                  
                  9,280,172Options
                      under the Plans
                  
                  
                  1,335,000Series
                      D conversions
                  
                  
                  375,000Series
                      E conversions(a)
                  
                  
                  4,027,218Litigation
                  
                  
                  250,00015,267,390
 
 
 (a)
            assumes conversions as of December 31, 2004 at $.11, per
            share.





15.
      Stock
      Option Plans





The
      1996
      Stock Option Plan (Plan) is administered by the Board of Directors


or
      a
      committee thereof and options to purchase 4,709,219 shares of common
      stock


may
      be
      granted under the Plan to directors, employees (including officers)
      and


consultants
      to the Company. The Plan authorizes the issuance of incentive stock


options
      (ISO's), as defined in Section 422A of the Internal Revenue Code of


1986,
      as
      amended, and non-qualified stock options (NQSO's). Consultants and


directors
      who are not also employees of the Company are eligible for grants
      of


only
      NQSOs. The exercise price of each ISO may not be less than 100% of the
      fair


market
      value of the common stock at the time of grant, except that in the
      case


of
      a
      grant to an employee who owns 10% or more of the outstanding stock of
      the


Company
      or a subsidiary or parent of the Company, the exercise price may not
      be


less
      than
      110% of the fair market value on the date of grant. The aggregate
      fair


market
      value of the shares covered by ISO's granted under the Plan that
      become


exercisable
      by a Plan participant for the first time in any calendar year is


subject
      to a $100,000 limitation. The exercise price of each NQSO is
      determined


by
      the
      Board, or committee thereof, in its discretion; provided that
      NQSO's


granted
      a
      10% Stockholder be no less than 110% of the fair market value on
      the


date
      of
      grant.




Under
      the
      1998 Stock Option Plan (98 Plan), the Company may grant options to


purchase
      300,000 shares of common stock to employees, directors, independent


contractors
      and consultants of the Company. The 98 Plan is similar to the Plan


and
      authorizes the issuance of ISO's, NQSO's and Stock Appreciation
      Rights.




Under
      the
      2000 Stock Option Plan (2000 Plan), the Company may grant options


to
      purchase 2,000,000 shares of common stock to employees, directors,


independent
      contractors and consultants of the Company. The Plan includes


options
      to purchase an addition 250,000 shares of common stock, reserved for
      an


Industrial
      and Scientific Advisory Committee to be formed as necessitated by
      the


Company.





The
      following table summarizes the activity of the Plans for 2004 and
      2003.





2004
              2003Weighted
              
              WeightedAverage
              
              AverageExercise
              
              ExerciseShares
              Price
              Shares
              PriceOptions
                  outstanding, beginning of year
              1,335,000
              $0.70
              2,569,000
              $1.20Granted
              None
              -
              NoneCanceled,
                  exercised, expired or exchanged
              None
              -
              (1,234,000)
              $1.74Options
                  outstanding, end of year
              1,335,000
              $0.70
              1,335,000
              $0.70Options
                  exercisable, end of year
              1,335,000
              $0.70
              1,335,000
              $0.70Options
                  available for grant, end of year
              1,050,000
              
              1,050,000Weighted-average
                  fair value of options grantedduring
                  the year
              $.00
              
              $.00







F-14














The
      following table summarizes information about stock options
      outstanding


under
      the
      Plan at December 31, 2004:





****
            **Weighted**
            ****
            ********
            ****
            **Average**
            ****
            **Weighted******
            ****
            **Remaining**
            ****
            **Average****Range
                of**
            **Outstanding**
            **Contractual**
            **Exercisable**
            **Exercisable****Exercise
                Prices**
            **Options**
            **Life
                (Years)**
            **Options**
            **Price**$3.50
            65,000
            2.50
            65,000
            $3.50$2.00
            70,000
            3.00
            70,000
            $2.00$0.675
            650,000
            .50
            650,000
            $0.675$0.50
            100,000
            6.25
            100,000
            $0.50$0.24
            35,000
            8.00
            35,000
            $0.24$0.20
            60,000
            1.75
            60,000
            $0.20$0.15
            355,000
            5.50
            355,000
            $0.15$0.15
                to $3.50
            1,335,000
            2.70
            1,335,000
            $0.70








16.
      Revenues





Sales
      of
      Technology





Through
      September 1, 2003, the Company licensed the non-exclusive,
      worldwide


use
      of
      the Company's patents for the manufacture, use and marketing of its


auto-disable
      syringes providing for royalties on sales. In December 2003, the
      Company


sold
      this
      license and assigned certain patents to a creditor in payment of $99,433


and
      also
      assigned certain future royalties under the auto-disable syringe


licensing
      agreement. The Company has licensed back the rights under these


patents
      to market and manufacture in North America.








Note
              17 - Concentrations
 
 The
              Company purchased 99% of its pharmaceutical drugs for its group purchasing
              service from one vendor. This supplier is not a related party as defined
              in SFAS
              57. The arrangement requires the Company to pay for the drugs within
              forty five
              days after the respective period month-end.
  The
                Company maintains a corporate group purchasing sales arrangements
                with an
                affiliated company, Pharmacy Services, Inc. (PSI), which is not a
                related party
                as defined in SFAS 57. This affiliate is a private company wholly
                owned by the
                President of Univec, Inc. The Company, through its wholly owned subsidiary
                Physicians and Pharmacy Services, Inc. (PPSI), sells certain pharmaceutical
                drugs to PSI at competitive corporate group purchasing competitive
                prices. PSI
                must pay the Company for such goods within thirty days of the appropriate
                month-end. PSI pays the Company a specified price, which is based
                on the cost of
                the drugs as determined by the Company’s market experience with its providers.
                PPSI purchases these drugs at competitive rates from a national pharmaceutical
                drug manufacturer.
 Revenue
                Recognition
 
 The
                Company utilizes the gross sales method of recognizing the amount
                of revenue
                from product sales. This method is influenced by several factors
                as defined by
                EITF 99-19, which the Company’s market agreement has indicated to be in
                accordance with the gross sales method, The most significant factors
                under the
                agreement include: the Company, rather than the supplier is the primary
                obligor
                in the arrangement, the Company, rather than the supplier is maintains
                the
                general inventory risk, the Company retains absolute control over
                which product
                is supplied to the user, the Company retains control over selection
                of the
                supplier, the Company defines the product specifications, the Company
                maintains
                the credit risk under the arrangement.
 
  Sales
                Rebates
 
 For
                the
                year-end December 31, 2003, the Company recognized $381,949 of rebates
                provided
                to the Company’s group purchasing customer as general and administrative
                expenses. However, EITF 01-9 requires that such rebates be reported
                as a
                reduction of revenues. This reclassification is reported on the enclosed
                Statement of Operations for year-end December 31, 2003. No such rebate
                payments
                have been made to any customer after that time.
 
 
 Distributor
                Arrangements
 
 The
                Company markets its syringe products exclusively through distributors
                and
                various government agencies. Accounts receivable balances are payable
                within
                thirty days of shipment. Univec provides a product quality warranty
                on its
                products. The Company has never had any of its products returned
                due to product
                deficiencies. The products are priced under competitive arrangements
                with each
                customer. The product revenue recognition is based upon the prices
                charged to
                each customer. The Company has no price concessions which allow payments
                below
                the agreed prices.
 
 
 Product
                Warranties
 
 The
                Company provides a product warranty for the products sold. However,
                the Company
                has never had a product returned due to defective quality. Further,
                there are no
                warranty costs recognized in any of the years ended December 31,
                2004 and 2003.
                The Company believes that because no warranty costs were incurred
                during any of
                the periods mentioned, there is no need to disclose any additional
                warranty cost
                policy or amounts.
 Note
              18, Discontinued Operations - Page 15
 
 The
              Company recognized a loss of $597,056 on the 2004 sale of Thermal Waste
              Technology Corporation (TWT) a wholly owned subsidiary. This loss included
              a
              $554,542 write-off for the total impairment of goodwill attributable
              to the
              subsidiary. TWT was sold to an officer of the Company and his related
              parties,
              all former owners of TWT, in exchange for 404,154 shares of common
              stock of the
              Company, cancellation of deferred compensation to the officer of $221,042
              and
              cancellation of the officer’s employment agreement. In addition, the officer
              received options to purchase 97,710 shares of common stock of the Company,
              exercisable at $.01, per share, for 10 years and the other purchasers
              received
              option to purchase 296,444 shares of common stock of the Company, exercisable
              at
              $.07, per share, for 10 years. The officer also will receive $100,000
              in cash,
              payable in monthly installments of $10,000, commencing August 2004
              and medical
              insurance payments of $3,600. All of the Univec, Inc. common stock
              and options
              exchanged in the transaction was valued at publicly listed closing
              prices of the
              Company’s common stock. Such publicly listed valuations are in accordance with
              the guidance of SFAS 123 and EITF 96-18.
 
 During
              the year-ended December 31, 2003 the Company reported that a corporate
              officer
              had instituted a legal action for approximately $200,000 for wages
              plus
              approximately $12,000 related to health and dental insurance premiums
              plus
              interest. All amounts within the claim were previously accrued by the
              Company as
              operating expenses as they were incurred. However, the Company’s defense in the
              matter included a claim that the officer had entered into one or more
              agreements
              with third parties on behalf of the Company without notifying the Company’s
              President or Board of Directors. The Company asserted that damages
              to the
              Company in excess of the alleged liability to the officer had been
              incurred.


F-15





19.
      Goodwill





Goodwill
      had represented the excess purchase prices paid by the Company over
      the


fair
      value of the tangible and other intangible assets and liabilities at
      the


dates
      of
      acquisitions. Goodwill had not been amortized, but instead was


subject
      to an annual assessment of impairment by applying a fair-value
      based


test.
      The
      Company evaluated the carrying value of goodwill as of December 31,
      2004.


The
      Company determined the carrying value of goodwill has been fully impaired and
      has


written-off
      the carrying value of $1,774,119.








20.
      Subsequent Events





Common
      Stock





In
      January 2005, 30 shares of Series E and unpaid dividends thereon of $2,188
      were


converted
      into 804,688 shares of common stock at $.04, per share.





In
      January 2005, the Company issued an aggregate of 1,037,980 shares of common
      stock to


three
      officers of the Company in exchange for deferred compensation of $60,000 and
      accrued


expenses
      of $17,158.





In
      February 2005, the Company issued 50,000 shares of common stock to an officer
      in


payment
      of deferred compensation of $5,000.





In
      March
      2005, the Company sold 350,000 shares of common stock to two investors
      for


an
      aggregate of $35,000.





Due
      to
      Affiliated Companies and Officers





Subsequent
      to December 31, 2004, the Company borrowed an additional $70,000 from
      the


affiliated
      companies.








F-16